THE LARGE supermarket chains have been accused by Fine Gael of putting up to 100,000 Irish jobs at risk by forcing suppliers to pay €160 million a year in “hello money”.
The charge was made by the Fine Gael spokesman on agriculture and food, Michael Creed, at the publication of a Private Member’s Bill designed to eliminate the practice of “hello money” in the grocery sector.
“I am seriously concerned that food suppliers in this country are being subjected to unfair demands by the large retailers in this country, with industry sources suggesting that an estimated €160 million in ‘hello money’ is being paid each year by suppliers hoping to secure their products on supermarket shelves,” said Mr Creed.
He said it was impossible to quantify the full scale of “hello money” and other cloak-and-dagger practices that were threatening the agri-food sector and putting thousands of jobs at risk.
“Suppliers are terrified to acknowledge what they are paying to retailers as they fear their products may be removed from retailers’ shelves as a result. However, on the basis of my extensive contacts with industry at retail, supply and producer levels, I am assured that this practice is widespread, with many individual food suppliers paying up to €1 million in ‘hello money’ each year.
“I believe 10 companies were forced to pay a shocking total of €30 million during the course of four months.”
Mr Creed said producers faced demands for “hello money” from the major multiples.
While the practice had been outlawed under the Competition Act of 2006, he said it was not being enforced because the onus was on the supplier to initiate court action and suppliers faced being put out of business if they took such legal action.
The Food (Fair Trade and Information) Bill 2009, published by Fine Gael, would make it an offence for retailers to demand a grant or payment of an allowance from a supplier for advertising or displaying grocery goods, or for providing selling space for grocery goods in a retail outlet.
The Bill requires all retailers and suppliers to maintain a statement of supply detailing the terms and conditions of any agreement undertaken, and requires them to give access to the Competition Authority to such statements.
The Bill also imposes an obligation on the Competition Authority to detail turnover and gross net profit for each multiple retailer in the State in its annual report, and gives the authority powers under the Competition Act to secure this information if it is withheld.
It empowers the National Consumer Agency to publish an annual report detailing the extent of sourcing in the State by multiple retailers of food products .
Mr Creed said Government plans to introduce a voluntary code were utterly pointless and would have little or no impact.
In a response to the Fine Gael claims, the Musgrave Group said it was not involved in the practice of “hello money” and said it would welcome any moves to control and eliminate such sharp practices from the Irish grocery sector.
“In response to the Fine Gael Bill on fair trade, the Musgrave Group has stated that it is categorically opposed to illegal, unfair and unsustainable business practices which put the existence of suppliers at risk and damage the reputation of the industry and responsible players within it,” the company said in a statement.
It added, however, that a distinction had to be made between sharp practices and legitimate negotiation, which was vital to driving down costs and delivering value to consumers.
“Musgrave Group has today written to Fine Gael to outline its position on its approach to working with its suppliers which is based on developing long-term mutually beneficial relationships and to point out that it is fundamentally opposed to and does not engage in the practice of ‘hello money’,” said the statement.
Irish Farmers Association president Padraig Walshe said it was now widely accepted in the Irish food sector that there was a major lack of retail regulation.