Supermarkets to be Publicly Shamed if They Pressure Suppliers

Large grocers in the UK will be monitored by a Grocery Code Adjudicator in 2012.

Large grocers in the UK will be monitored by a Grocery Code Adjudicator in 2012.

In February the new Groceries Supply Code of Practice (GSCP) was introduced.  The GSCOP has been put into place to insure that grocers do not put undue financial pressure on suppliers or cause unfair trading between one supermarket and another.  Instead of initially being fined the Groceries Code Adjudicator (GCA) plans on publicly humiliating the Grocery by informing the public of any confirmed GSCOP breaches.

The GCA will be monitoring grocers with turnover above 1 billion pounds, which would include 10 UK supermarkets: Tesco, Asda, Sainsbury’s, Morrisons, Waitrose, Marks & Spencer, Aldi, Lidi, Iceland and the Co-operative Group.  The GCA will be a part of the Office of Fair trading (OFT).  Plans are for the GCA to begin in the year 2012. 

While the threat of losing sales through public disclosure will be the primary punishment financial penalties could be an additional result of any misconduct.

Grocers reacted negatively to the proposal of a GCA which will cost each grocer 120,000 pounds to fund.  They warned that the cost would be handed down to consumers.

A Sainsbury spokesman stated: “We do not see the need for a Grocery Code Adjudicator.”

James Lowman, the chief executive of the Association of Convenience Stores, welcomed the proposals as a “pro-competitive step that will prevent the worst abuses of buyer power in a market place that is so consolidated that it prevents a real risk to consumer interests.”

One concern is that those suppliers lodging complaints or supplying information should be kept anonymous to prevent retaliation of the grocer by withholding business.  The government is to publish a draft bill concerning the GCA later this year.

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