Will Parliament confirm the powers of the Groceries Code Adjudicator this month?

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The Groceries Code Adjudicator (GCA) was established by Act of Parliament in June. The appointed Groceries Code Adjudicator, Christine Tacon, can now receive confidential complaints and evidence about how large supermarket retailers are treating their direct suppliers.

The code covers the activities of the 10 biggest supermarkets with a turnover of more than £1bn and – if ratified – the adjudicator will have the power to impose fines of millions of pounds..

Under the Groceries Code:

• .“retrospective payments” were banned;
• retailers now have to compensate suppliers for forecasting errors;
• they cannot de-list suppliers without good reason,
• and they have to give reasonable notice..

“If you’re a beef farmer, reasonable notice could be three years; if you grow tomatoes it could be 18 months – but not two weeks, which is what is happening now,” said Mrs Tacon, and:

The code prohibits any variation to supply agreements without notice, including demanding lump sums after a deal is agreed, plus:

• 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..

No conflict of interest

Christine Tacon says that she will continue to hold her non-executive roles with farming-related companies because none of them is a direct supplier to retailers. The code only applies to direct suppliers..

When will her ‘full powers’ to act on ‘unsavoury activities’ be granted?

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At the end of November, Ms Tacon told Lincolnshire brassica grower and NFU horticulture and potatoes board chairman Sarah Dawson that in her short time as adjudicator she has already uncovered a number of unsavoury activities still going on in the supply chain. She told Cornish farmers that a large number of complaints, so far, had involved payment deductions on invoices for spurious reasons – and sometimes supplier farmers had taken years to recover the cash that was owed them..

Business Sense offers the graphic seen above and answers: “Guidance outlining the maximum fines that the Adjudicator will be able to impose will be published six months after the bill comes into effect”..

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

“The misuse of power by major retailers is a global problem and not just a feature of the UK market. Other countries are watching with interest to see how we handle it in the UK.”.

Initial tactic?

“I’ll be adopting a softly, softly approach . . . to give supermarkets the opportunity of addressing any breaches of the groceries supply code of practice.”

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The Groceries Code Adjudicator: presentation – only works if you have PowerPoint software: “A 12-slide presentation that gives the history and explains the powers, remit and functions of the new Groceries Code Adjudicator (GCA)”.

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