DUBLIN – The agri-food regulator An Rialálaí Agrabhia has identified systemic power imbalances and a “fear factor” within the supply chains of major grocery retailers and wholesalers.
Findings from the regulator’s second annual supplier survey reveal that while overall compliance with unfair trading regulations is high, smaller producers remain vulnerable to margin compression and retaliatory risks. This data arrives as the state body prepares for a significant expansion of its enforcement powers in December.
The survey analyzed more than 1,300 trading relationships between nearly 500 suppliers and eight of the dominant players in the retail grocery sector: Aldi, BWG Foods, Dunnes Stores, Lidl, Marks & Spencer, Musgrave Group, Sysco, and Tesco.
Regulatory Compliance and Unfair Trading Practices
The research evaluates supplier-retailer dynamics against legislation stipulating 16 specific Unfair Trading Practices (UTPs). These regulations are part of a broader EU-wide framework designed to protect smaller operators from the disproportionate bargaining power of large-scale buyers, and have been transposed into Irish law through the Unfair Trading Practices Regulations.
One in nine respondents reported being subject to a UTP, a decrease from one in seven in the previous year. However, the regulator highlighted the persistence of “unconditional black UTPs” – practices prohibited in all circumstances – which include:
- Late payments to suppliers.
- Cancellation of orders at short notice.
- Requirements for suppliers to pay for product losses regardless of responsibility.
Suppliers reported serious ongoing issues regarding the cancellation of perishable product orders and a pervasive fear of backlash when reporting these practices to authorities. For smaller primary producers, the regulator notes, a single cancelled order or extended delay in payment can have disproportionate implications for cash flow and investment.
Systemic Market Pressures
The regulator found that while relationships often appear functional on the surface, they are governed by “wider system-level pressures.” These include pricing and decision-making power concentrated with buyers and fixed-payment processes that disadvantage smaller entities in the agri-food supply chain.
Rising operational costs, driven by wage increases, input price volatility and the need to adapt to climate change, have created significant friction. Suppliers reported that retailers often refuse to accept price increases tied to these factors, leading to squeezed margins, deferred investment and, in some cases, staff layoffs.
“We are too small to complain.”
The report concludes that buyers largely control “if, when, and how prices change,” effectively determining how inflationary pressures are distributed along the chain. While larger suppliers possess the legal and commercial leverage to push back against these pressures – including access to in-house legal teams and diversified customer bases – smaller suppliers absorb greater risk and are less able to pass on inflation.
The impact is further exacerbated by distributor-led models, which the regulator noted “extend payment timelines further,” increasing financial exposure for those with smaller capital buffers and limited access to working capital facilities.
Corporate Governance and the Culture of Fear
A significant portion of the research focused on the psychological dynamic between suppliers and buyers. An Rialálaí Agrabhia identified a “fear factor” that discourages the reporting of UTPs, despite the formal protections that exist on paper.
Suppliers cited three primary reasons for remaining silent:
- Fear of retaliation, specifically the risk of having products delisted.
- Concerns that the regulator might reveal the reporting source to the buyer.
- The belief that their identity could be easily guessed even if anonymity is maintained.
Testimony from suppliers highlighted communication failures, with some noting that buyer interaction is often limited to emails with no response, or that poor forecasting systems create “immense pressure” on the supply chain when orders are adjusted at short notice. In several cases, suppliers said they relied on informal relationships and intermediary organisations rather than formal complaints channels to raise concerns.
The regulator frames these behaviours as a corporate governance challenge for major retailers and wholesalers, arguing that internal compliance structures and board-level oversight will be critical to reducing perceived retaliation risks and normalising engagement with the State watchdog.
Expanded Enforcement Powers
Established in December 2023, An Rialálaí Agrabhia currently operates as an independent State body under the Department of Agriculture, Food and the Marine, with a mandate to oversee fairness and transparency in the agri-food supply chain from farm to shelf. While suppliers describe the regulator as a “comforting presence,” Chief Executive Niamh Lenehan stated there is still work to do to “ensure that all suppliers feel confident in raising a potential breach of the UT regulations.”
To address the current lack of transparency, the regulator will be granted increased powers in December under secondary legislation implementing the EU unfair trading framework. These changes will enable the body to compel businesses, including global entities such as Tesco and Sysco, to provide mandatory data regarding:
- Pricing structures.
- Supply chain logistics.
- Salary data.
The regulator will also gain the authority to issue administrative fines for non-compliance, moving its remit beyond guidance and informal resolution towards sanctions and deterrence. These powers follow repeated failures by businesses to provide requested data voluntarily and are intended to give the State clearer sight of how value is distributed along the supply chain.
For policy-makers in Dublin and Brussels, the coming year will be a live test of whether stronger disclosure obligations and the threat of penalties can shift entrenched commercial practices. The effectiveness of these enhanced powers will be measured in the next annual supplier survey, which will determine if the added regulatory heft begins to correct the current power imbalance in the agri-food sector or if further legislative intervention will be required.
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