Supermarket suppliers need to crack the Code

The decision by the Competition and Markets Authority (CMA) to assess whether to bring Aldi and Lidl within the scope of long‑standing groceries market regulations is a reminder that the UK supermarket sector is more tightly regulated than even food and drink businesses may realise.

This was highlighted during a presentation by John Noble, of the British Brands Group, at Brodies’ annual Food and Drink Conference earlier this year. John summarised the benefits to food and drink producers of the Groceries Supply Code of Practice, which imposes strict rules on how the UK’s 14 largest groceries retailers handle their suppliers. However, only some of our audience were actually aware of the Code, suggesting that memories have faded since its introduction in 2013 and indeed that newer food and drink businesses may never even have realised it exists.

The Code was introduced further to a Competition Commission investigation into supermarket supply chain practices, which found that some retailer behaviours were adversely affecting competition and consumers. It imposes various obligations on the largest retailers, including:

Charles Livingstone is Partner and Head of Food & Drink, Brodies​

• dealing fairly and lawfully with suppliers;
• not varying supply agreements retrospectively;
• providing reasonable notice of any significant changes to supply chain procedures;
• not delaying payments (which would include refusing to make due payments);
• not requiring contributions to marketing costs;
• not requiring suppliers to pay for shrinkage or wastage;
• no direct or indirect payment in exchange for being made a supplier, other than for promotions or a risky new listing;
• not requiring payment for better positioning or more shelf space;
• meeting the predominant cost of promotions;
• only de-listing for commercial reasons, and on reasonable notice.

The Code also requires the retailers to incorporate the Code in all grocery supply contracts, train relevant staff on the Code, and appoint a Code Compliance Officer to ensure compliance and be suppliers’ main point of contact.

These obligations are enforced by the Groceries Code Adjudicator, who can arbitrate retailer-supplier disputes and investigate suspected Code breaches (suppliers can report breaches confidentially). In serious cases the Adjudicator can fine a retailer up to 1 per cent of its turnover, meaning retailers are strongly incentivised to comply – indeed, a 2025 study by the Adjudicator found that almost all retailers had compliance scores above 90 per cent.

Suppliers should therefore ensure they make full use of the Code when managing their retailer relationships.

The same Commission investigation resulted in the Groceries Market Investigation (Controlled Land) Order 2010, which limits the ability of certain retailers to enter into or enforce exclusivities or restrictive covenants in their property agreements. This makes it harder for retailers to prevent competitors opening near their existing supermarkets.

Earlier this month, the CMA called for views on whether the Order should cover Aldi and Lidl. This would be the first expansion of the Order’s scope since it was made, and may be welcomed by the seven retailers who are currently designated and would prefer a ‘level playing field’.

Owners of retail developments where Aldi or Lidl benefit from exclusivities may also welcome the opportunity to lease units to competing supermarkets. The CMA’s invitation to comment closes on 13 April, so interested parties should act fast.

Charles Livingstone is Partner and Head of Food & Drink, Brodies