The UK’s Competition Commission has published its final order to establish a code of practice governing the relationship between the country’s grocery retailers and their suppliers.
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Following last year’s investigation into competition in the market, the Commission said that a strengthened code of practice was needed to provide a “clearer framework” for contractual agreements between retailers and suppliers.
The Commission has also asked the UK government to set up an ombudsman to resolve disputes between suppliers and retailers.
“The aim is to ensure that suppliers do not have costs imposed on them unexpectedly or unfairly by retailers,” the Commission said this morning (4 August).
The new Groceries Supply Code of Practice (GSCOP) will be based on the existing supermarket code of practice, but will be amended so that an overarching “fair dealing” provision is included.
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By GlobalDataRetailers will be prohibited from making retrospective adjustments to terms and conditions, while suppliers will not be not liable for shrinkage.
Retailers will also be required to keep written records detailing terms and conditions, as well as enter into binding arbitration to resolve disputes.
The code of practice will be applicable to all retailers with a groceries turnover in excess of GBP1bn per annum and it will be written into all contracts between supermarkets and suppliers.
The Commission also revealed that it has asked the UK government to establish a retail ombudsman to arbitrate disputes, having failed to win retailers’ support for the move.
Commission chairman Peter Freeman said that it was “clearly desirable” that the ombudsman be established “as soon as is practicable”.
“The new code of practice will work much better as a result and suppliers and retailers will have greater confidence that its terms will be observed,” he said.
