Adjudicator aims to ‘curb excesses’ of retail giants

THE groceries code adjudicator has said she hopes to curb the “excesses” of supermarkets in their dealings with suppliers without necessarily invoking her considerable powers to mount formal investigations and impose hefty fines.

From left, Neil Butler, Richard Lochhead, Ross Paton and David Houston. Picture: Contributed

Christine Tacon told a farming conference yesterday at Thainstone Centre, Inverurie, that much could be achieved by working through the compliance officers, which all the major supermarkets have now employed to deal with complaints from suppliers.

“I’ll be adopting a softly, softly approach in the first instance to give supermarkets the opportunity of addressing any breaches of the groceries supply code of practice,” Talcon said at a conference to mark the 40th anniversary of Aberdeenshire-based animal feed company, Norvite.

“If I don’t have to carry out any investigations or fine anyone, it won’t mean that I’m not doing my job. I’m confident that the threat of investigation and a fine will be enough to achieve many of the changes suppliers have been demanding to ensure a fairer balance of power in the grocery supply chain.”

But she made it clear that she would not hesitate to take the appropriate action if supermarkets failed to address any unfair practices brought to her attention.

“However, I can only take action if suppliers tell me what is going on,” she said. “If I don’t know about alleged abuses, there’s nothing I can do.”

Tacon acknowledged that a fear culture existed among suppliers and promised anonymity to ensure supermarkets could not subsequently penalise suppliers who lodged complaints.

The UK farmers’ unions have been calling for the appointment of a grocery ombudsman for many years and their pleas were supported by the Competition Commission following an investigation in 2008 into allegations of practices which were deemed detrimental to the consumer.

The grocery code covers the activities of the UK’s ten biggest supermarkets with a turnover of more than £1 billion and Talcon has the power – still to be ratified by Parliament following a three-month consultation period – to impose fines of up to 1 per cent of turnover which, in the case of Tesco, could amount to £500,000.

But the adjudicator has no powers over price setting and can only intervene in direct dealings between retailer and supplier.

The code prohibits any variation to supply agreements without notice (such as demanding lump sums after a deal is agreed) and includes payment terms, limits on payments for shrinkage or wastage, no listing fees, compensation for forecasting errors, no position payments except for promotions and no over-ordering at promotional prices. Suppliers should not be expected to be the predominant funders of promotions.