An important deadline is looming for those operating as “compliance reporting buyers” in the agricultural and food products supply chain.

Background

The Agricultural Food and Supply Chain Act 2023 (the “2023 Act”) was enacted and commenced in its entirety in 2023. The key tenet of this legislation was the establishment of a new regulator – An Rialálaí Agraibhia (the “Agri-Food Regulator”). This is a new independent statutory office tasked with promoting fairness and transparency in the agri-food supply chain in Ireland (“the State”).

The 2023 Act came into force on 13 December 2023 and at the same time the Agricultural and Food Supply Chain (Unfair Trading) Regulations 2023 (the “2023 Regulations”) were issued under the 2023 Act to give further effect to EU Directive 2019/633 on unfair trading practices in business-to-business relationships in the agricultural and food supply chain (the “UTP Directive”), which seeks to address power imbalances between buyers and suppliers. 

The 2023 Regulations revoke the European Union (Unfair Trading Practices in the agricultural and food supply chain) Regulations 2021 (the “2021 Regulations”) which previously gave temporary effect to the UTP Directive in the State.

Enforcement functions and powers previously held by the Minister for Agriculture, Food and the Marine and the interim Unfair Trading Practices Enforcement Authority were transferred to the new Agri-Food Regulator under the 2023 Act. 

Deadline of 31 March 2025

The 2023 Regulations prescribe new obligations for buyers to assist the Agri-Food Regulator in the performance of its functions and to ensure compliance with the 2023 Regulations.

The 2023 Regulations introduce the concept of the “compliance reporting buyer”, being a natural or legal person (or group of persons) established in the State who buys agricultural and food products, with an annual turnover of more than €50,000,000 in the previous year. 

Regulation 7 provides that a compliance reporting buyer is required to submit an annual compliance report to the Agri-Food Regulator no later than 31 March each year, detailing their compliance with the 2023 Regulations for the previous calendar year. Buyers who exceed the above turnover threshold must therefore submit their first compliance report to the Agri-Food Regulator by 31 March 2025 – covering the calendar year from 1 January 2024. Compliance reporting buyers must also maintain copies and records of certain specified documents and information.

Compliance reporting buyers are also required to appoint a liaison officer who will communicate with the Agri-Food Regulator on behalf of the buyer in relation to the 2023 Regulations. The liaison officer was to be appointed no later than 12 June 2024, and buyers must confirm the officer’s name, position, and contact details to the Agri-Food Regulator as soon as practicable following the nomination of the liaison officer.

All buyers to whom the 2023 Regulations apply are also required to regularly monitor and evaluate the adequacy and effectiveness of policies, procedures, systems internal control mechanisms and arrangements relating to UTPs and take appropriate measures to address any deficiencies.

Failure to comply with these (and other) obligations under the 2023 Regulations (which are specified as penal provisions) are open to risk of prosecution under the 2023 Act.

• on summary conviction, to a fine not exceeding €5,000 or to imprisonment for a term not exceeding 6 months, or both; and

• on indictment, to a fine not exceeding the greater of €10,000,000 or 10 per cent of aggregate turnover in the financial year in which the offence was committed, or to a term of imprisonment not exceeding 3 years, or both.

 This represents a significant increase to the previous maximum fine of €500,000 imposable under the 2021 Regulations.

What is covered more generally by the 2023 Regulations?

The 2023 Regulations apply to both oral and written agreements for the sale or supply of agricultural and food products by a “supplier” to a “buyer” where either party is established in the EU.

Importantly, the 2023 Regulations apply to such supply agreements whether concluded before or after the coming into force of the 2023 Regulations. This is a change from the 2021 Regulations, which only applied to agreements concluded before the coming into effect of the 2021 Regulations after a transition period of 12 months had elapsed.

As under the 2021 Regulations, the 2023 Regulations do not apply to agreements between suppliers and consumers.

The 2023 Regulations set out 16 Unfair Trading Practices (“UTPs”), which remain largely unchanged from the 2021 Regulations.  Certain UTPs are prohibited unconditionally, with others being conditional i.e. where buyer and supplier have agreed to same. The Agri-Food Regulator can receive and hear complaints regarding instances of suspected UTPs in the State, which are submitted by suppliers, trade organisations or independent non-profit organisations acting on behalf of suppliers.

Who is covered?

Previously, the annual turnover of buyers and suppliers had to meet certain relative tiered thresholds for the 2021 Regulations to apply.  This tiered approach has been removed by the 2023 Regulations in favour of a more simplified test.

To be captured by the 2023 Regulations, a supplier must have a lower annual turnover than that of the buyer, and the buyer’s annual turnover must exceed €2,000,000. While the 2021 Regulations could not apply where the turnover of a supplier exceeded €350,000,000, the 2023 Regulations contain no such upper limits on the supplier’s turnover.

Where the buyer is a public authority, the 2023 Regulations apply regardless of the respective turnovers of the buyer and the supplier.

Next steps

Compliance reporting buyers in scope should be preparing for the reporting deadline of 31 March 2025. The position in terms of the appointment of a liaison officer and confirmation of their details per the 12 June 2024 deadline should also be reviewed as a priority.

There is a series of FAQs on the Agri-Food Regulator’s website which provide guidance on some of the necessary information.