AGREEMENT BETWEEN FIAB AND ASEDAS A NEW WAY FORWARD?

1. AGREEMENT BETWEEN FIAB AND ASEDAS A NEW WAY FORWARD? Horacio González Alemán

2. BRIEF INTRODUCTION • ASEDAS: SPANISH Supermarkets Organization 50% Total Food Retail (40% Hypermarkets, 10% Traditional & others shops) The fast growing segment of food retail in Spain in the last years

3. WHY THIS KIND OF AGREEMENT • Spanish Law do not cover all the critical issues in the relationship industry-trade, • Revision of Directive 2000/35 takes a lot of time (2009?) But companies do need solutions, and now!

4. THE MAKING OF THE AGREEMENT • In 2005 we established a working group with representatives of both Associations and 14 (7+7) executives from different companies and sectors. • After 2 years of negotiation final text was approved by the Board of FIAB and ASEDAS, with the green light of Ministry of Commerce and Competition Authorities

5. MAIN ELEMENTS • Agreement does not substitutes law, it is only a complement • Basic principles of the relationship are • Freedom of pact • Equality among the parties • Mutual interest • Shaved responsibility • Formalisation of agreements (written form) • Rationale behind the actions

6. THE STRUCTURE OF THE AGREEMENT FIAB-ASEDAS • INTRODUCTION, GENERAL PRINCIPLES • COMMERCIAL NEGOTIATIONS • PROMOTIONAL ACTIVITIES AND SERVICES RENDERED BY 3rd PARTIES • LOGISTICS AND ASSURANCE OF SUPPLY • ADMINISTRATIVE AND TREASURY MANAGEMENT • FULFILMENT OF LEGAL OBLIGATIONS • FOOD SECURITY QUALITY AND CONSUMERS • FOLLOW-UP AND APPLICATION

7. Examples of obligations assumed by companies • Annual commercial negotiations will be signed and finalised by the participating companies within a framework of reasonable deadlines (max. 3 months since started) • Taxes, tariffs, green dot and other obligations should have a neutral effect on the economic position of the parties. • Companies shall insure that the whole organization (including regional branches) fulfil the signed agreements; avoiding that the lack of information could be claimed to infringe it. • Commercial promotions shall be agreed upon by writing; all promotional activities agreed and not performed should be compensated

8. Refusal of reception or unjustified return of merchandise requested by one operator which convey Additional cost of transportation, supply, reduction or depreciation of value to the supplier shall be economically compensated • Returns should always be duly justified and documented • Charges shall always be documented by writing, and justified • Basis for the calculation of estimated discounts (charges, rappels, contributions ...) should be precisely defined • Compensation of debtors-creditors balances will not be imposed unilaterally • Follow-up Committee to foster application among the associates, resolution of Conflict Committee with an independent professional and Ministry of Commerce to solve substantial discrepancies that might arise when applying the Agreement.

9. IMPLEMENTATION • Since November´07 is has to be applied by companies of both sides –supermarkets one is critical! • A conference –presentation has been held, and in 2008, FIAB and ASEDAS will organize • technical presentations in different cities, • joint training programmes for companies. • Ministry of Commerce will participate in follow-up and information campaign

10. STRATEGY • The legal framework is uncomplete, Agreement can help us in balancing the relationship. Acceptance and introduction of a “new business culture” (consuetudo mercatorum?) is critical • The outcome is clear: • If it works, we can extend the Agreement to Hypermarkets (Association, individual companies) • If it doesn't there will be major reasons for a new and much stricter (legal) framework