Big retailers ‘using strong-arm tactics’
They are also demanding hello money and enjoy margins that are three times higher than they get in other markets, according to a new report by the Oireachtas Joint Committee on Enterprise, Trade and Employment.
Called the Supplier-Retailers Relationships in the Irish Grocery Market, the report identifies serious irregularities within the market that the Government must act to eliminate, it said. “A code of practice should be introduced in the retail sectors to ensure transparency, fairness and equality” in the sector without delay, it said. It found many suppliers had been subjected to practices by retailers that included “unreasonable demands for financial contributions being made with implied threats for non-compliance”.
The Committee chairman Willie Penrose TD said of the 50 main suppliers in the Irish retail market initially contacted to take part in the investigation a large number refused to co-operate “fearing negative publicity and retribution” forcing the inquiry to adopt a policy of “complete confidentiality”.
Due to the heightened concerns of those who took part the chairman said none of the committee knows the identity of the final participants, which includes two manufacturers, two processors/packers and an importer.
“It is common practice for suppliers to be subjected to requests for ‘hello money’, in one form or another, and they are also frequently required to make payments and provide services that are considered to be outside acceptable business practice”, the report said. Such requests were tough on small suppliers with limited resources, the report said.
While consumers have a wide selection of stores to shop in they are paying too high a price for these products and the report has made a number of key recommendations to ensure “fair and competitive practices” in the future.
They include:
- The introduction of a legislative Code of Practice to ensure fairness and equality, as well as a system for measuring compliance.
- Agreement of a method by which all relevant data pertaining to the market, including profit margins of suppliers and retailers, is put into the public domain.
- Establishment of a cross border advisory group to look for inequities within the retail market.
The report highlights “the disproportionate market power” large retailers enjoy in Ireland and the disadvantages it imposes on suppliers. Mr Penrose said the various types of hello money and the unwarranted payments regularly demanded by the retailers operating here, can be described not only as a misuse of their market power but as “unethical” as well, he said.
All of the major retailers operating in Ireland are customers of the suppliers who took part in the compilation of the report.
