retail chains abuse of buyer power the irish experience
Download
Skip this Video
Download Presentation
Retail Chains – Abuse of Buyer Power The Irish Experience

Loading in 2 Seconds...

play fullscreen
1 / 17

Retail Chains – Abuse of Buyer Power The Irish Experience - PowerPoint PPT Presentation


  • 71 Views
  • Uploaded on

Retail Chains – Abuse of Buyer Power The Irish Experience. William Prasifka Chairperson, The Competition Authority 11 November 2009. Grocery Reports. The Grocery Monitor Project Report 1: The Structure and Operation of Grocery Retailing Report 2: Price Trends

loader
I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
capcha
Download Presentation

PowerPoint Slideshow about ' Retail Chains – Abuse of Buyer Power The Irish Experience' - kinsey


An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript
retail chains abuse of buyer power the irish experience

Retail Chains – Abuse of Buyer PowerThe Irish Experience

William Prasifka

Chairperson, The Competition Authority

11 November 2009

grocery reports
Grocery Reports

The Grocery Monitor Project

  • Report 1: The Structure and Operation of Grocery Retailing
  • Report 2: Price Trends
  • Report 3: Retail Planning System

Retail-related Import and Distribution Study

the problem
The Problem
  • Buyer Power
    • Retailers are moving supply to the UK
    • Unfair demands are squeezing suppliers
    • Allegations of millions in hello money & slotting allowances
  • Fear of consequences
    • Delisting
    • Job Losses

“The forced payment of up to €160m in ‘Hello Money’ to large supermarket chains by Irish suppliers is jeopardising thousands of Irish agri-business jobs”

Member, Irish Parliament

the solution
The Solution

Proposal to introduce:

  • Code of Practice in Ireland
  • Grocery Ombudsman
  • Based on the UK Model

Key Objective : Protect Suppliers from

  • Unfair Practices
  • Hello Money & Slotting Allowances
current legislation
Current Legislation

The Competition (Amendment) Act 2006 prohibits

  • Imposing resale price maintenance
  • Apply dissimilar conditions to equivalent transactions
  • Slotting allowances
  • Hello Money

These prohibitions are subject to a competition test

our experience
Our Experience

Competition (Amendment) Act 2006 never been used

  • Few complaints
  • Anecdotal fear of coming forward
  • No private actions

Will an Ombudsman change this?

uk experience
UK Experience

Different competitive dynamics

  • EDLP v’s High/Low pricing
  • Shoppers travelling to Northern Ireland – not vice versa

Has the UK Supermarket Code been effective?

  • Fear among suppliers
  • Failure to use the code to resolve disputes
  • Few cases mediated
ombudsman v s act
Ombudsman v’s Act
  • No Competition Test
  • No new incentive to come forward
  • Costly
  • Has little power

The Code will “do a lot of harm by trying to do a little good”

ESRI

buyer power
Buyer Power

If this is the problem, what is the solution?

Changing the rules - Regulation? Ombudsman?

Will Result in:

Those with buyer power changing behaviour

  • Find alternative methods of “squeezing”
  • Encourage trading with non-Irish suppliers
buyer power1
Buyer Power

Only effective remedy is new entry

But…

Irish planning laws restrict entry

  • Maximum retail floorspace caps
    • Grocery Store: 3,000/3,500 m2
    • Discounters (ALDI/Lidl): 1,000/1,500 m2
  • Trade Diversion Test
  • Process used strategically to frustrate competition
the ikea effect
The IKEA Effect

Attempts to enter Irish market

  • Planning issues - Restricted due to floorspace caps
  • 2005 Caps lifted for non-food stores in certain areas
  • 2006 IKEA Planning application
  • 2007 Planning permission granted

Finally opened 27 July 2009

And Then What Happened ?????????

ad