The Groceries Code

6 February, 2018

Do you supply products to supermarkets?  If so, it’s important you understand your rights under The Groceries (Supply Chain Practices) Market Investigation Order 2009 (Groceries Code).  It is intended to help level the playing field between large supermarkets by protecting suppliers from being put under unfair commercial pressure.  The key points to consider are set out below and a copy of the Groceries Code is available here.

Which supermarkets must comply?

The Groceries Code applies to the following supermarkets and their subsidiaries (Designated Retailers):

1              Asda Stores Limited

2              Co-operative Group Limited

3              Marks & Spencer plc

4              Wm Morrison Supermarkets plc

5              J Sainsbury plc

 

6              Tesco plc

7              Waitrose Limited

8              Aldi Stores Limited

9              Iceland Foods Limited

10           Lidl UK GmbH

Other retailers may be added to this list by the Office of Fair Trading (OFT) where their turnover exceeds £1 billion with respect to the supply of groceries within the UK.

Obligations of the Designated Retailers

The Groceries Code requires the Designated Retailers to incorporate the code in agreements with suppliers, which should be recorded in writing and provided to the supplier along with their terms and conditions.  In addition, the Designated Retailer should inform the supplier of their rights under the Groceries Code, including their right to complain to the Grocery Supply Code Ombudsman (Ombudsman).

Terms of Supply

Designated Retailers are required to deal with their suppliers fairly and lawfully, without duress and in recognition of their need for certainty of the terms of supply, particularly in relation to production, delivery and payment issues.  Restrictions are placed on the retailer’s ability to charge for items such as marketing costs, payments for stocking, shrinkage, wastage, forecasting errors, promotions or unjustified payments for consumer complaints.

De-Listing

A Designated Retailer may only de-list a supplier for genuine commercial reasons.  A supplier should not be de-listed for exercising its rights under the Groceries Code, or as a result of the failure of the retailer to comply with its obligations.  Prior to de-listing, the retailer should give written notice to the supplier providing reasons for termination.  The notice period should allow sufficient time for the supplier to have the decision reviewed by a senior buyer and attend an interview with their code compliance officer.

Dispute Resolution

A Designated Retailer must negotiate in good faith with a supplier to resolve any dispute arising under the code.  If a dispute arises and this cannot be resolved through dialogue, the supplier may notify the retailer’s code compliance officer that they wish to initiate a dispute resolution procedure.  After this notice is given, the parties have 21 days to resolve the dispute and if it is not resolved then the supplier may refer the matter to the Ombudsman for arbitration.  The costs of the Ombudsman will be paid by the Designated Retailer unless it is decided that the claim was vexatious or wholly without merit.

If you would like further advice, please contact Tom Bourne on 01892 506099 or tom.bourne@crippspg.co.uk to discuss your situation.