Supermarket suppliers told use the groceries code adjudicator or lose it

There has been a worrying lack of evidence from suppliers since the groceries code adjudicator (GCA) was established last year to tackle unfair supermarket buying practices.

Last month’s GCA annual conference revealed that 80% of suppliers had experienced an issue with a retailer, but only 23% would consider giving evidence. Fear of retailer retribution prevented 58% of respondents from raising issues, while 40% worried the GCA would be unable to do anything.

“I need the evidence,” says Christine Tacon, the incumbent GCA. “If people want things to change, then they have to come forward.”

A lack of evidence will limit the adjudicator’s ability to lead change in retailer-supplier relationships, warns the NFU’s head of food and farming Phil Hudson, and even threatens its long-term survival.

“Information is fuel to the adjudicator,” he says. “She relies on evidence – without it she will struggle to go forward.”

‘Use it or lose it’

“If [the GCA] is not utilised, then there is the risk that those not supportive of it will say ‘well do we really need it’?” says Mr Hudson.

“My office is subject to review after two years,” says Ms Tacon. “If it is found that we are not making a sufficient difference, then it can be shut down.

“We need to get to a cultural change in retailers where they don’t [breach the code].” But this won’t happen she says, unless she has the evidence to investigate retailer breaches, “get on top of them” and use her powers to deal with illegal behaviour.

Trust and anonymity

There is also a profound need to tackle low awareness of the GCA’s remit, says Mr Hudson, as many of the issues raised so far have been outside the adjudicator’s powers.

Trust in the adjudicator also needs building, as many suppliers worry about their identity being protected. “I have a legal duty to protect anonymity,” says Ms Tacon. “If people don’t feel they can risk raising an issue with a retailer directly or their code compliance officer, then telling the GCA is lower risk.”

Evidence from multiple sources is key to protect anonymity, says Ms Tacon, and is one reason why she cannot launch an investigation without sufficient information.

“Every single person’s experience of a breach of the code is of interest,” she says. If one supplier has experienced a breach, then “it’s likely to be widespread”.

“It’s worth telling me so we can put a stop to it quickly – if they’re breaking the code, then they’re breaking the law,” she says.

Trade associations are invaluable in collecting evidence, particularly on smaller issues which suppliers may feel reluctant to raise. “Speak to us,” says Mr Hudson. “Everyone [at the NFU] will be happy to talk and we can add another layer of anonymity.”

Making progress

Issues have so far been dealt with by working with the retailers’ code compliance officers (CCOs) and no formal investigation has yet been launched. Suppliers have only twice asked the GCA to arbitrate.

However, when information is brought forward, the GCA is starting to show she can make a difference. Following evidence of forensic auditing (retailers trawling communications to find ways to claim money from suppliers) the GCA persuaded eight retailers to commit to limiting this practice.

Tesco retracted requests for shelf-positioning payments after evidence was brought to the GCA, while The Co-operative stopped asking suppliers to “compensate” it under joint business agreements after the adjudicator was informed.

The GCA’s office has identified five main supply-chain issues to focus on and is warming up for an investigation into retailers pressuring suppliers to use selected third-party suppliers.

Supermarkets are slowly showing signs of responding. Where the code is grey, some have asked the GCA for guidance, unreasonable requests have sometimes been retracted after suppliers challenged retailers on the code, while others say they received better information about why they had been delisted.

But to really make a difference, Ms Tacon says suppliers need to be aware of the GCA and GSCOP, know where the GCA’s website is, consult the code if a retailer practice doesn’t seem fair – and then call her office.

15 years in the making

• The GCA and GSCOP took about 15 years of fierce case building and lobbying to bring about and included two major commissions
  
• In 1999, following an eight-month inquiry, the Office of Fair Trading (OFT) referred the conduct of retailers to the Competition Commission, after which a code of practice was established in 2001
  
• Due to the failure of the code to prevent retailer abuse of power, the commission ran a second inquiry, recommending that the code be strengthened – GSCOP came into law in 2010
  
• Having failed to reach a voluntary agreement with retailers, in 2009 the commission recommended that an independent ombudsman be appointed – the GCA was established in 2013 following an Act of Parliament
  
• The NFU, Traidcraft, British Brands Group and many other trade bodies, civil society groups and MPs submitting evidence, lobbied and worked together
  
• As a result, all the main political parties included the formation of a GCA in their 2010 election manifestos

Key supply-chain issues identified by the GCA

• Audits of communications to find instances where a retailer may be able to claim money from a supplier. Eight retailers have said they will limit this from six to two years.
  
• Problems with payments when there is a disparity between what the supplier says it delivered and what the retailer says it received.
  
• Poor forecasting, leaving suppliers with charges and short notice to fulfil orders.
  
• Requests for payments to boost a retailer’s margins.
  
• Multiple or inflated charges for packaging.

Have you experienced one of these issues? The GCA is collecting evidence. To contact the GCA go to the GCA’s website or call 
020 7271 0221. The NFU is also collecting evidence. Take part in the NFU’s survey or call 02476 858 612