Restricting promotions of food and drink high in fat, sugar or salt - proposed regulations: consultation

Section 4: Businesses in scope

Points of clarification

Qualifying Businesses

As detailed in the following section, we propose that price and location restrictions (both instore and online) will apply to qualifying businesses.

As set out in paragraph 112, this would include:

• Retail such as supermarkets, convenience stores, discounters and bargain stores (including online sales);
• Out of home such as takeaway, home delivery services, restaurants, cafes, coffee shops, bakeries, sandwich shops and workplace canteens (including online sales) – see glossary for further detail;
• Wholesale outlets where there are also sales made to the public (including online sales); and
• Other outlets such as clothes shops, tourist shops and pharmacies (including online sales).

At paragraph 116 we propose that a qualifying business would be:

a) a business which offers pre-packed targeted foods, (and non-pre-packed soft drinks with added sugar in respect of unlimited refills for a fixed charge) for sale to the public in the course of business (whether in-store or online);

b) a business with 50 or more employees.

Out of Home businesses operating within the premises of a qualifying business

At paragraph 126 we set out that concessions are separate businesses which operate in a designated area within the premises of a qualifying business if they operate their own payment facility.

The current policy intention is that a public facing out of home offering such as an in store café owned by a qualifying business operating in a designated area of that premises and with its own payment facilities would be considered similarly to a concession and treated as a separate business.

112. In our 2022 consultation, we proposed that price and location restrictions will apply to any place where pre-packed targeted foods (and non-pre-packed soft drinks with added sugar in respect of unlimited refills for a fixed charge) are sold to the public in the course of business. This would include:

• Retail such as supermarkets, convenience stores, discounters and bargain stores (including online sales);
• Out of home such as takeaway, home delivery services, restaurants, cafes, coffee shops, bakeries, sandwich shops and workplace canteens (including online sales) – see glossary for further detail;
• Wholesale outlets where there are also sales made to the public (including online sales); and
• Other outlets such as clothes shops, tourist shops and pharmacies (including online sales).

113. In feedback to our 2022 consultation, non-industry respondents tended to support promotion restrictions applying to retail, out of home, wholesale (where sales are also made to the public) and other outlets to ensure consistency so that the restrictions are effective. Industry respondents tended to agree with restrictions applying to retail but were quite split in respect of the other three places; some believed all four should be included to ensure a level playing field across businesses, while others thought there should be alignment with England where the primary focus is on retail.

114. A more detailed breakdown of the feedback is available in section 6 of the independent analysis report of the consultation, published in May 2023.

Proposals

115. Following careful consideration of the feedback received, we propose that price and location restrictions (both instore and online) will apply to a qualifying business.This would include retail, out of home, wholesale and other businesses as set out at paragraph 112. Proposed exemptions from location restrictions are explored in more detail in section 5 of this consultation paper.

116. We propose that a qualifying business would be:

a) a business which offers pre-packed targeted foods, (and non-pre-packed soft drinks with added sugar in respect of unlimited refills for a fixed charge) for sale to the public in the course of business (whether in-store or online);

b) a business with 50 or more employees.

117. We propose that the restrictions would not apply to:

• wholesale outlets (where sales are only to trade);
• where sales are not in the course of business, for example food provided through charitable activities^[29], for example bake sales;
• care homes^[30]; and
• schools^[31]

118. Manufacturers would not be considered a qualifying business unless they are selling pre-packed targeted foods directly to consumers.

119. Where a qualifying business sells targeted foods to the public through a website or other online platform, such as an aggregator or delivery app, they will be required to comply with price and location restrictions in respect of those online sales of targeted foods. Parts of online aggregator sites or apps may be captured by promotions restrictions, such as checkout pages or pop-ups on the qualifying business' sections of the app or site.

Franchises and symbol groups

120. We recognise that some food businesses operate on a franchise basis or as part of symbol groups (which are a form of franchise for convenience stores).

121. We consider franchises to be an authorisation granted or sold, such as to use a name or to sell products or services. In its simplest terms, a franchise is an authorisation from one undertaking or business permitting another undertaking or business to sell a product or service under a particular name or trademark.

122. We consider symbol groups to be a form of franchise of convenience stores. The group does not necessarily own or operate stores, but acts as suppliers to independent stores which may then trade under a common banner. Being part of a symbol group can offer, among other things, point of sale material, promotional activity and merchandising support.

123. In feedback to our 2022 consultation and recent roundtable discussions, some industry stakeholders highlighted that there are distinct differences between a franchise and a symbol group, with the latter not subject to the same strict controls as a franchise arrangement. It was also noted of the approximate 5000 convenience stores operating in Scotland, around 30% operate as part of a symbol group and that arrangements vary between stores and symbol groups.

124. Whilst we recognise that franchise and symbol group agreements are not one size fits all and comprise a spectrum of arrangements, there are aspects of these arrangements which are particularly relevant to this policy, as described at paragraph 122. Trying to differentiate between different arrangements could lead to complexity when determining which of the arrangements a business falls within, potentially leading to increased regulatory burden for businesses and enforcing authorities. We are also mindful of the overarching call from industry for alignment with the regulations for England.

125. Taking into account the feedback received, for the purposes of determining how many employees a business has, we propose that restrictions would apply to franchises or symbol groups where multiple businesses operate under the same name (where the total number of employees operating under that business name is 50 or more). For both franchises and symbol groups, the size of the business would be classified by the total employees of the business overall and not the employees of the individual franchise or symbol group store.

Concessions

126. We propose that concessions are separate businesses which operate in a designated area within the premises of a qualifying business if they operate their own payment facilities.

127. Where a concession is located within a qualifying business's premises, but not part of its business, it is proposed that it would be treated as a separate business. If the concession meets the criteria to be considered a qualifying business in its own right, as set out at paragraph 116, it would be required to comply with promotion restrictions (both price and location).

128. Areas within stores that are owned and operated by the qualifying business – for example, the bakery section within a supermarket that is owned and operated by that supermarket – would not be considered concessions as they form part of the same business.

UK Government regulations for England

129. The UK Government has set out in its regulations the criteria for determining whether businesses are within the scope of the restrictions. Our proposed approach, including with regard to the treatment of franchise and symbol groups and concessions, is consistent with that in England (with the exception of out of home, which is not within scope in England except in relation to free refills). Further detail is set out in the regulations and accompanying guidance for England.

130. It is recognised that the extent to which the proposals align with regulations in place in the rest of the UK may impact on the likelihood of the measure to impact on intra-UK trade. We will continue to consider these implications as the policy proposals develops and upon receipt of the consultation responses.

Questions

Question 17 - Are the types of business within the scope of the policy sufficiently described for the purpose of implementation and enforcement?

Yes

No

Don't know

Please explain your answer.

Question 18 - Is the proposed extension of restrictions to online sales, including through online aggregator sites and apps, (see paragraph 119) sufficiently described for the purpose of implementation and enforcement?

Yes

No

Don't know

Please explain your answer.

Question 19 - Are the arrangements for franchises and symbol groups sufficiently described for the purpose of implementation and enforcement?

Yes

No

Don't know

Please explain your answer.

Question 20 - Do you foresee any impacts on the ability of businesses to trade either within the UK market or internationally from any of the proposed measures?

Yes

No

Don't know

Please explain your answer.

Question 21 - Please provide any additional comments on the businesses proposed to be within scope of the policy.

Comment