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The Groceries Code: the Adjudicator wants to hear from suppliers

Shopping trolley full of groceries in a supermarket aisle Print publication

12/05/2015

The Groceries Code Adjudicator (the GCA) continues the task of contacting suppliers to help her identify those buyers who are the most prolific contraveners of the Groceries Supply Code of Practice (the Code). In launching her survey, the GCA has emphasised that it is the buyers that she is most concerned with, noting that relationships between the respective chief executives of a supplier and retailer may be very good but that does not mean they are as good “on the ground”. The retailers have agreed that the GCA can send the survey to their entire supplier list.

A similar survey initiated last year met with only limited take-up from suppliers but the position may be different this time around as the GCA now has the power to fine supermarkets up to 1 per cent of their turnover. On the other hand, suppliers are no less afraid this year than they were last year of a possible de-listing so it is far from clear that the GCA will get a comprehensive response to the survey. Respondent suppliers are, however, assured of anonymity which should only be breached with their agreement or where required by law or court order.

Responses to last year’s survey showed the following:

  • 40 per cent of respondents claimed that their supply agreements or terms of supply had been retrospectively varied. The Code prohibits retrospective variations of supply agreements (unless the ability to make such variations is included as part of the trading arrangement from the outset). It also prohibits Designated Retailers (those retailers subject to the Code) from requiring significant changes to supply chain procedures without reasonable notice in writing or full compensation for costs incurred as a result of any failure to give such reasonable notice
  • 37 per cent of respondents complained about unjustified charges for consumer complaints. The Code says that where a complaint is received in-store, the Designated Retailer must not require the supplier to make any payment for resolving such complaint, unless certain conditions are satisfied
  • 36 per cent of respondents reported an obligation to contribute to marketing costs. The Code says that a Designated Retailer may not require a supplier to contribute to its marketing costs
  • 35 per cent per cent of respondents reported a delay in payment. The Code’s stipulation is that payment must be made in accordance with the terms of the supply agreement and in any event within a reasonable time after presentation of the invoice.

The last of these is particularly pertinent in the light of the announcement in February that the GCA was investigating Tesco for delaying payments to suppliers. (The GCA is also investigating allegations that Tesco breached the Code prohibition against payments for better positioning of goods which are not subject to a sales promotion).

With one eye on the March 2016 statutory review of the office it is clear that the GCA is prepared to be assertive. Suppliers, as well as retailers, are going to become increasingly familiar with the Code and the GCA.

If you would like to discuss any of the issues raised in this briefing, including how to approach the GCA with a complaint, or how to respond to a request for information from the GCA in a way which will not impair commercial relationships, please do not hesitate to contact your usual contact in the Walker Morris Food and Drink Group.

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