Ms Isolde Goggin:

I thank the Chairman and the committee for the opportunity to speak to it today about the proposed directive of the European Parliament and of the Council on unfair trading practices in business-to-business relationships in the food supply chain. I am joined by Mr. Fergal O’Leary, member of the commission and by Mr. Seán Murphy, director of consumer protection and chief legal adviser.

I plan to focus in particular on two areas in my opening statement - the content of the proposed directive and the designation of an enforcement authority.

The CCPC was established in 2014 to enforce competition and consumer protection legislation across the economy. Our vision is for open markets, where consumers are protected and businesses actively compete. Each year we help more than 40,000 consumers via our helpline and more than 1.7 million consumers via our website. We are currently active in the following areas across the economy - motor insurance; household waste collection; mortgages; nursing homes; personal contract plan, PCP, car finance; vehicle crime; bid-rigging in the public transport sector; and ticketing, to name but a few. I think the committee will agree that these are all areas which are of importance to consumers. We also have ongoing work across the economy in fulfilling our mergers and product safety remit. We do this with just under 100 staff across all of those areas.

Over the years, the CCPC and its predecessor organisations: the Competition Authority and the National Consumer Agency, have been active in the food sector in the enforcement of competition and consumer protection law; the publication of grocery surveys; product pricing inspections; assessing a number of mergers; and, in the fulfilment of one of our most recent areas of responsibility which is the grocery goods regulations, which I will speak about in more detail shortly.

We understand that the European Commission’s proposed directive seeks to address imbalances of power in the food supply chain and its goal, as part of number of current initiatives, is ultimately: “to contribute to ensuring a fair standard of living for agricultural producers”. This goal has relevance for all of us as consumers and as citizens. We also note that the proposed directive is based on Article 43 of the treaty.

It is in the context of our work in this sector, particularly regarding the grocery goods regulations, and the experience this has afforded us to date that we wish to share our views which we hope will be of assistance to the committee in its deliberations.

As the members may be aware, while the CCPC's mandate is economy wide, we have one sector-specific remit, namely, that which relates to grocery goods. The regulations in this regard were introduced in 2016 in order to address certain practices in the grocery goods sector with the goal of bringing transparency and certainty to trade relationships. It is important to highlight that price or price levels are not within the scope of the current regulations. When introducing the regulations, the Minister stated, "relationships will continue to be based on commerce and prices will continue to be set by hard negotiations – this is in the interests of consumers". The focus of the regulations is on the relationship between suppliers of food and drink and grocery businesses, both wholesalers and retailers, which have a worldwide turnover in excess of €50 million. To date, 22 grocery undertakings come within the scope of the regulations. These 22 traders are required to have written contracts for all relevant suppliers in which the terms and conditions must be expressed in clear, understandable language. These contracts must be signed by both parties and retained for six years. If certain practices are to apply, they must be pre-agreed and covered in the written contract. Through our work to date, we have found that the contracting models used by traders are different and involve varying levels of complexity. We would be happy to discuss this aspect in more detail later, but I will not dwell on it now.

Since the introduction of the regulations, the CCPC has adopted a phased approach by promoting awareness of the new requirements under the regulations and allowing the traders involved to bring their practices into compliance where necessary. Following an assessment of annual compliance reports received from 22 operators earlier this year, officers from our consumer protection division have been conducting on-site inspections and meeting relevant industry players.

In light of our experience to date, we see substantial differences between the existing regulations and the proposed directive. Of particular significance is the aim of the directive to "ensure a fair standard of living". This is a significant departure from the aim of the current regulations. Of equal relevance is the proposed scope; the Commission’s model would apply throughout the supply chain and to buyers not currently covered by the existing regulations, including those in the food processing and food service sector. I will return to this later.

Although the CCPC is currently the enforcement body for the existing regulations, given the aim and scope of the proposed directive we believe that a dedicated and focused sectoral regulator should be established to carry out this work. The reasons for this are primarily concerned with our dual mandate to promote competition and to protect the interests and welfare of consumers. In addition, our existing and future operational commitments in enforcing competition and consumer protection measures at a national and international level are significant challenges in themselves. The CCPC would have grave concerns that our ability to fulfil our current mandate would be irrevocably diminished if we were given this task. The proposal is extensive and will require considerable resource investment. To give full effect to what is proposed would, in our opinion, be better secured by the creation of a sectoral regulator.

We welcome the committee's scrutiny of the proposed directive and we wish to highlight some concerns from the perspective of our statutory mandate. The aim of the proposed directive is "to address unfair trading practices in the food supply chain". We are concerned about the impact of the current proposals on consumers and also what might be added at an EU or Irish level. The proposed directive is a minimum harmonisation instrument, meaning that member states can go further if they believe it is necessary. In this regard, we are aware that further additions to the proposed directive are being advocated. These include further broadening of the scope to include more traders as well as a ban on below-cost selling. Competition law works in the interest of consumers by requiring that businesses act independently and compete with each other when setting prices. That is why we, and our previous organisations, have spoken strongly against the introduction of bans on below cost selling. Any legislative requirements relating to pricing or pricing models may provide an incentive for businesses to co-ordinate prices. Overall, we believe that consumers could end up paying more for food for two reasons, first, because some grocery markets could become less competitive and, second, that the not insignificant cost of this proposed directive will inevitably be passed onto consumers. Effective enforcement is essential in ensuring that any regulations have the intended outcomes and that the costs incurred deliver benefits for those who are paying.

I will use the remainder of my time to discuss some of our enforcement experience, which I hope will benefit the committee. An ongoing matter of debate and commentary in this sector is the lack of actionable complaints.