New Code to Stop Supermarkets ‘bullying’ Small Suppliers

New Code to Stop Supermarkets ‘bullying’ Small Suppliers

Shelves of groceriesThe Forum of Private Business (FPB) has welcomed the introduction of a new code of practice designed to stop supermarkets exploiting small suppliers.

Published by the Competition Commission, the Groceries Supply Code of Practice (GSCOP) came into force on 4th February and applies to all supermarket chains with a turnover of £1 billion or more. The new code replaces the previous Supermarkets Code of Practice (SCOP) which only applied to the big four; Sainsbury’s, Tesco, Asda and Morrisons.

The ten main supermarkets have signed up to the GSCOP, which will prevent them from altering supply terms after an agreement has been made and asking suppliers to pay for products that have been lost or stolen during delivery. The code also entitles suppliers to apply to an independent arbitrator if they have a problem with a retailer, with initial costs paid by the retailer.

“Time and time again, supermarkets are simply unreasonable in the demands they place on suppliers and fail to properly negotiate and co-operate with them,”

said FPB chief executive, Phil Orford.

“This bullying behaviour is simply bad practice and an abuse of their dominant market position. That is why a new, more robust code of practice and an ombudsman to enforce it are entirely necessary.”

The FPB said that the new code must stop the following bad practices:

  • Retrospective altering of supply terms, after a contract has been agreed.
  • Returning unsold or damaged goods to suppliers and expecting the supplier to refund the cost.
  • Sudden demands for suppliers to cut their prices or lose their contract.

Supermarkets that breach the code could face fines under the Enterprise Act. The Competition Commission has recommended that the Department for Business, Innovation and Skills (BIS) should introduce an ombudsman, and BIS has accepted that a body of some form needs to be appointed to enforce the code.

Supermarket group Iceland’s chief executive, Malcolm Walker, said the new code of conduct would not help small firms.

“Nothing is going to change,” he said. “Big suppliers bully small retailers and big retailers bully small suppliers.”

However, the British Retail Consortium’s director general, Stephen Robertson, said that supermarkets were working hard to comply.

“The effort and money retailers are putting into demonstrating they meet the code’s requirements and informing suppliers shows they accept their responsibilities as major players in the supply chain,” he said.

“An ombudsman will not be necessary as retailers recognise the need for strong relationships with their suppliers and will not abuse them.”

For more information visit the Competition Commission website for the Groceries Supply Code of Practice (GSCOP)

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