MEP calls for EU inquiry into Tesco supplier charges

 

THE EUROPEAN Commission should investigate allegations that Irish suppliers are being charged up to €500,000 to have their produce stocked in Tesco stores, Labour MEP Alan Kelly said.

Mr Kelly expressed concern at the amount of power large multiples have over their suppliers, and he said this suggested companies such as Tesco had little interest in Irish farmers, food producers or consumers.

His comments followed yesterday’s Irish Times report into how Tesco has been demanding millions of euro from Irish suppliers over the past two months in return for the continued stocking of their products.

Mr Kelly said he intended to write to the incoming European commissioner for competition, Joaquín Almunia, to ask him to “launch an investigation into the behaviour of supermarket multiples and the effects of their behaviour on both producers and consumer choice”.

Tesco yesterday said the grocery market in Ireland was highly competitive with prices arrived at through detailed negotiations between retailers and suppliers.

“It is through such negotiations that prices to consumers have been reduced in the past year – food prices are now 8.2 per cent lower than a year ago, resulting directly from the efforts of Tesco to bring prices down,” Tesco said in a statement. “Every year, retailers and suppliers will negotiate prices and trading arrangements for the year ahead. These negotiations include determining the level of business suppliers might gain for their products and the investment they are prepared to make in the marketing and promotion of their products.”

A survey by ShelfLife magazine, published yesterday, found that 95 per cent of supermarket suppliers had reported that pressure was exerted on them to give retailers more favourable prices.

The online survey of 150 suppliers found that 67 per cent had a product delisted by a multiple last year. Half the suppliers polled said they had been threatened with delisting this year, with 80 per cent claiming Dunnes Stores was the biggest aggressor in this regard, followed by Tesco.

Ann Fitzgerald of the National Consumer Agency said it would be an “outrageous” situation if Tesco, or any other retailer, was in fact charging suppliers premiums to sell their products.

She said this could not happen in the UK, where there was a strict code of conduct governing relations between retailers and suppliers.

Ms Fitzgerald said she supported the introduction of such a “properly structured code which enables fair play between suppliers and retailers”.

A spokesman for Minister for Enterprise Mary Coughlan said competition law prohibited retailers from compelling suppliers to make payments for the advertising or display of grocery goods.

He said anyone who had evidence of traders engaging in such practices should bring this evidence to the attention of the Competition Authority so it could be fully investigated.

He said the Renewed Programme for Government contained a specific commitment to “implement a code of practice for doing business in the grocery goods sector to develop a fair trading relationship between retailers and their suppliers”.

He said Ms Coughlan intended to give effect to this commitment by introducing legislation later this year.