IGD: Conduct expected of participants when working on supply side projects

Date : 29 August 2012

This policy outlines what IGD expects of members in terms of compliance with relevant competition laws when they are working on supply side projects with a trading partner, or with another supplier with whom they do not compete. Supply side projects focus on issues which may affect the supply chain, such as distribution and wastage. They are distinct from those demand side projects which are more directly related to consumer demand, such as category management.

The policy deals with both: (i) interacting with trading partners (or other suppliers with whom you do not actually or potentially compete); and (ii) reporting the results of supply side projects to working groups. It should be read in conjunction with the IGD's Competition Compliance Policy which can be found at www.igd.com/policies.

Generally, the rules regarding information sharing between a supplier and a retailer who are in a trading relationship, or between suppliers who are neither actual nor potential competitors, are less stringent than those which apply as between competitors. Nonetheless, parties engaged in bi-lateral discussions with a trading partner (or with another supplier with whom they do not actually or potentially compete) will still need to be mindful of competition law in their interactions and in reporting the outcome of those interactions.

This document was prepared for the IGD and does not constitute legal advice to its members. Each member of the IGD is responsible for its own competition law compliance and should seek independent legal advice relevant to their individual circumstances. This is not a comprehensive record of all possible competition law obligations.

1. General

DO seek independent legal advice if you have any doubts about what information you can share, or agreements you can reach, with a trading partner (or with another supplier with whom you do not compete).

DO avoid any activity that could create even the appearance of a restriction or distortion of competition.

DO consider whether your trading partner is also your competitor or a potential competitor. If you are competitors or potential competitors, more stringent rules apply to the information you can share.

Companies are considered to be actual competitors when they supply goods that currently compete against one another to attract consumer spend. For example, a retailer with a private label brand may compete with a supplier of products in a similar category. Companies are considered to be potential competitors where there are reasonable grounds to believe that one would start to compete with the other in the event that prices for the products supplied by the other were to rise by a small, but not totally insignificant amount, even if this involved some (but not a prohibitive level of) investment on the part of the new entrant. For example, a supplier of deodorants could be considered to be a potential competitor to companies active in the shower gels market, given numerous historic examples of this form of brand extension.

2. Sharing information with your trading partner

DO feel free to share with your trading partner (or with another supplier with whom you do not compete) information of a technical or environmental nature and information which is publicly available and which is relevant to the bi-lateral project.

DO limit the amount of sensitive information you share with your trading partner (or with another supplier with whom you do not compete) to that which is strictly necessary for the project. Sensitive information includes information as to prices, discounts, costs, strategy, sales levels or customers.

DO consider whether the objectives of the project could be achieved by sharing historical, anonymised and / or aggregated data.

DON'T exchange with trading partners who are also competitors individualised, up-to-date commercial information, particularly with regard to prices, discounts, input costs, strategy, sales levels or customers, other than information already legitimately in the public domain.

DON'T share any information with your trading partner (or with another supplier with whom you do not compete) that relates to other trading partners or other suppliers, particularly if this is sensitive information regarding prices, discounts, input costs, strategy, sales levels or customers.

3. Implementing solutions with your trading partner

DO ensure that all decisions as to price and strategy are made by each party independently. For example, discussions may reveal that wastage could be avoided by marking down retail prices towards the end of each day. The decision to mark down prices and by how much must rest solely with the retailer. Similarly, decisions as to what lines to carry must be made independently by the retailer.

DON'T come to any agreement with your trading partner (or with another supplier with whom you do not compete) which relates to other trading partners (for example, an agreement to delist third party product lines). An agreement may include an oral or informal agreement, whether legally binding or not.

4. Reporting your solutions to the working group

DO consider carefully the information you will share with the working group and be sure to remove any information which may be sensitive (see above for what constitutes sensitive information).

DO avoid making recommendations to the working group that relate to any of (1) to (6) below.

DON'T hold discussions or exchange information with members of the working group that might relate to any of:

(1) prices or price factors, including discounts, rebates, and reductions;

(2) input costs;

(3) profits and profit margins;

(4) output and sales,

(5) investments and marketing plans;

(6) selection, rejection, or termination of customers or suppliers.

If a meeting or discussion involves practices contrary to what is set out in this document, the IGD expects and encourages members to terminate that meeting or discussion immediately