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The Groceries Supply Code of Practice

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The Groceries Supply Code of Practice (GSCOP) is legislation designed to regulate the relationship between supermarkets and their suppliers.

Since its introduction in 2009 the Code has had, in reality, limited impact. However, the introduction of a dedicated Grocery Codes Adjudicator (Christine Tacon) in 2013, has started to bring more focus on the legislation and its potential impact on supermarkets and suppliers.

If a retailer does not comply with the code, then a supplier is able to escalate the dispute and involve the Adjudicator who has the power to arbitrate, investigate and fine a retailer.

Understand the scope of its application

GSCOP is a legally binding code imposed on certain supermarkets. It does not apply to all supermarkets, only those which are defined as ‘Designated Retailers’. As it stands the following retailers are:

  • Asda
  • Co-op
  • Marks & Spencer
  • Morrison Supermarkets
  • Sainsbury's
  • Tesco
  • Waitrose
  • Aldi
  • Iceland
  • Lidl

The list can grow as retailers that have a turnover in excess of £1 billion for grocery sales are eligible for inclusion.

What about suppliers?

The code only applies to suppliers when they are providing groceries for resale by one of the retailers listed above, it does not apply to suppliers of services such as logistics or IT or suppliers of goods which are not for resale.

What does the term groceries cover?

The term groceries can be a little misleading as it includes food and drink, pet food, cleaning products as well as toiletries and household goods.

The obligations for retailers

Retailers are obliged to train staff, appoint an in-house compliance officer and to issue an annual report on their compliance with the code. For suppliers, the relationships with head buyers and the compliance officer are key.

There is a substantial list of obligations that retailers must comply with when it comes to their supplier relationships, these include ensuring that supply terms are recorded in writing, that the full terms are agreed at the beginning of the relationship and that appropriate contacts (head buyers) are identified from the outset.

The remaining information mostly relates to the conduct of retailers who must deal reasonably, with good faith and within the law. There are also many points that have financial implications and impact upon unfair payment requests – it is vital that all parties understand these requirements or consult with someone who does.

How do I raise the issue with a retailer?

There are a range of remedial approaches that are worth exploring before approaching the Adjudicator. It is important to remember that a retailer will have spent a lot of time and effort on internal training and compliance programmes and will take any allegation of non-compliance very seriously.

Suppliers should raise any concerns about a breach of the code with their buyer in a constructive and collaborative way as most buyers will work to avoid an allegation of non-compliance.

How do I escalate a dispute?

If it does get to the stage where the Adjudicator is required, a supplier should take legal advice to ensure the retailer is in breach of the code.

The adjudicator has a formal escalation process as follows:

  • A supplier must make a written request to the senior buyer to review the dispute – they are obliged to undertake the review
  • The supplier must also inform the retailer’s Code Compliance Officer of the dispute
  • Both parties are obliged by the code to negotiate in good faith to resolve the problem
  • If the dispute cannot be resolved by negotiating then a supplier can request the Adjudicator to get involved.

It is important to remember that the Adjudicator's decision is final and binding.

How else can the Adjudicator assist?

The Adjudicator's role is not limited to arbitration on disputes. The Adjudicator has the power to investigate and make recommendations, require information to be published and impose financial penalties.

Suppliers can approach the Adjudicator directly or through a trade association which will retain confidentiality in most circumstances.;

The code also establishes a range of provisions in every supply contract between suppliers and retailers. It is therefore possible to take legal action for breach of contract.