Grocery Code Adjudicator launches investigation

Grocery Code Adjudicator (GCA), Christine Tacon, has today launched an investigation into Co-operative Group Limited. It is stated the GCA has formed a reasonable suspicion that the retailer may have broken the Groceries Supply Code of Practice (the Code). Alleged practices that have resulted in the investigation relate to de-listing and the introduction of bench-marking and depot quality control charges over a period from early 2016 to at least summer 2017

The GCA was established by the Groceries Code Adjudicator Act 2013 (“the Act”). The role of the GCA is to enforce the Code and to encourage and monitor compliance with it. The purpose of the Code is to ensure that the UK’s largest supermarkets treat their direct suppliers fairly and it applies to all retailers with UK annual groceries turnover exceeding £1 billion. Retailers it currently applies to are: Aldi Stores Limited, Asda Stores Limited, Co-operative Group Limited, Iceland Foods Limited, Lidl UK GmbH, Marks & Spencer plc, Wm Morrison Supermarkets plc, J Sainsbury plc, Tesco plc, and Waitrose Limited (“the Retailers”). The Code applies to the Retailers’ dealings with their direct groceries suppliers, whether based in the UK or elsewhere, in relation to the supply of groceries for resale in the UK.

The GCA enforcement functions provide powers to:

  • undertake investigations into Retailers,
  • make recommendations,
  • require information to be published; and
  • impose financial penalties.

The power to issue a financial penalty was brought into effect by the Groceries Code Adjudicator (Permitted Maximum Financial Penalty) Order 2015. This came into force on 6 April 2015 and provides for a maximum level of fine of 1% of the relevant retailer’s annual UK turnover. The power to impose financial penalties only applies to breaches occurring on or after 6 April 2015.

The previous Tesco investigation of January 2016, related to matters pre-April 2015 and therefore this financial penalty was not available; although Tesco was asked to contribute one million pounds to the costs of the year long GCA investigation. Significant changes were also recommended to the way Tesco dealt with suppliers after it was found the supermarket had deliberately delayed payments to suppliers to boost profits.  In the 2017 annual GCA survey of suppliers, although Aldi topped the overall table in which suppliers rank their perception of Retailers compliance with GSCoP for the fourth year in the row, Tesco easily led the field for the most improved and had implemented enormous improvements following a step-change in its engagement with suppliers.

The latest 2018 GCA annual online survey has just been launched and responses from suppliers are required by 22 April 2018.  

The GCA took her decision that an investigation of the Co-op Group was necessary in order to fully understand the extent to which the Code may have been broken, the root causes of the issues as well as their impact on suppliers. The GCA is asking for further information from direct suppliers to be submitted 3 May 2018.

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