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Creation of National Food Ombudsman Back on the Menu

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Having been introduced by Fianna Fail in March 2017, draft legislation providing for the creation of an independent National Food Ombudsman has lain dormant. However, the formation of a new coalition government has now potentially cleared a path for the creation of this new statutory body with a role in regulating the agri-food chain. Indeed, as recently as 20 January 2020, Michael Martin TD committed to establishing an independent national food ombudsman should Fianna Fail enter government, and the draft programme for government document 'Our Shared Future', contains the following proposal:

"Ensure fairness, equity and transparency in the food chain by establishing a new authority called the National Food Ombudsman (NFO) to enforce the Unfair Trading Practices Directive. This new authority will enforce EU wide rules on prohibited unfair trading practices in the food supply chain and will have powers to enforce this Directive, penalising those who breach regulations. The NFO will have a specific role in analysing and reporting on price and market data in Ireland."


The Unfair Trading Practices Directive ("the UTP Directive")


Published in April 2019 with the aim of protecting small and medium sized food suppliers against larger and stronger buyers, the UTP Directive bans or restricts 16 types of trading practices commonly encountered in business-to-business contracts in the food supply chain. This harmonising EU legislation will modify and supplement existing domestic regulations – the Grocery Goods Regulations 2016 (provided for under that Consumer Protection Act 2007) - designed to protect small and medium sized business from unfair trading practices.

The 16 practices addressed by the UTP Directive can be split out into two main categories:


1. Prohibited in all circumstances (Article 3(1)):                                                                                                                                                                                                                                  
  • Payment later than 30 days for perishable products;
  • Payment later than 60 days for other agri-food products;
  • Short notice cancellations, less than 30 days, of perishable products;
  • Unilateral contract changes by the buyer, usually relating to volumes, delivery, frequency, quality of products, etc.;
  • Making the supplier pay for things not related to the sale of the supplier’s products;
  • The buyer transferring liability to the supplier for deterioration or loss of products;
  • The buyer refusing to confirm in writing the supply terms / contract;
  • Misuse of trade secrets by the buyer;
  • Commercial retaliation by the buyer against the supplier exercising his legal rights; and,
  • Transfer of costs for examination of customer complaints to the supplier.                                                                                                                                                                                                                                                                                                 
2. prohibited unless previously agreed in a "clear and unambiguous manner" (Article 3(2)):
 
  • The buyer returning unsold products to the supplier without paying for them;
  • Charging the supplier for stocking, displaying or listing the food products;
  • Passing on to the supplier the cost of discounts / buyer’s promotions;
  • Charging the supplier for advertising by the buyer;
  • Payment charged to the supplier for marketing by the buyer; and,
  • Payment charged to the supplier for fitting-out the retailer’s premises.
Pursuant to Article 4, Member States are also required to designate a new or existing authority to enforce the UTP Directive by exercising the following powers, as provided for in Article 6:
 
  • the power to initiate and conduct investigations on its own initiative or on the basis of a complaint;
  • the power to require buyers and suppliers to provide all necessary information in order to conduct investigations of prohibited trading practices;
  • the power to carry out unannounced on-site inspections within the framework of its investigations, in accordance with national rules and procedures; 
  • the power to take decisions finding an infringement of the prohibitions laid down in Article 3 and requiring the buyer to bring the prohibited trading practice to an end;
  • the power to impose, or initiate proceedings for the imposition of, fines and other equally effective penalties and interim measures on the author of the infringement, in accordance with national rules and procedures; and,
  • the power to publish its decisions.
Ireland must transpose the UTP Directive into its national law by 1 May 2021 and a public consultation on transposition was carried out from October to December 2019.


The National Food Ombudsman Bill 2017 ("the Bill")


Although the Grocery Goods Regulations 2016 already provide certain protections to small and medium sized suppliers from unfair trading practices imposed by larger buyers, submissions by both the Irish Co-Operative Society ("ICOS") and the Irish Farming Association ("IFA") in relation to the transposition of the UTP Directive have pointed to a lack of effectiveness on the part of the Competition and Consumer Protection Commission ("CCPC") in enforcing these existing regulations given the CCPC's parallel responsibility to protect the interests of consumers, and the corresponding need for a dedicated regulator akin to the UK Grocery Code Adjudicator.

Although not currently containing any reference to the UTP Directive, it appears likely that as well as having responsibility for enforcing the existing 2016 Regulations, the planned National Food Ombudsman ("NFO"), who shall be a member of the CCPC albeit with a dedicated mandate, will also be tasked with enforcing the UTP Directive (once transposed) using the extensive powers referred to above.

Notwithstanding current and more pressing challenges faced by a Government managing a recovery from the COVID-19 health crisis, the transposition of the UTP Directive as well as the progress of this Bill through the houses of the Oireachtais will doubtless be tracked carefully by small and medium-sized food suppliers and the large buyers and retailers that they supply into.

The Bill in its current form can be accessed here.

A useful summary of the UTP Directive published by the EU Commission (DG AGRI) can also be accessed here.
 
Written by James Gallagher and Aaron Kelly


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