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February 26, 2009

UK: Commission to introduce grocery code of practice

The UK's Competition Commission is to introduce a code of practice for supermarkets in a bid to ensure the fair treatment of suppliers and address issues hindering competition in the market.

The UK’s Competition Commission is to introduce a code of practice for supermarkets in a bid to ensure the fair treatment of suppliers and address issues hindering competition in the market.

In its investigation into competition in the UK’s grocery sector last year, the CC said that a code of practice was required to control the buying power of certain supermarkets.

Through the code, the Commission hopes to prevent supply chain practices that transfer excessive risks and unexpected costs to suppliers.

The Groceries Supply Code of Practice stipulates that retailers “must not” require a supplier to change any aspect of its procedures during the supply agreement, and that the retailer must pay a supplier for products delivered within “reasonable time”.

The code also says that a retailer must not require a supplier to make any payment towards its marketing costs or include provisions in a supply agreement whereby a supplier must make a payment for shrinkage.

The retailers who will be included in the code include: Asda, Co-operative Group, Marks & Spencer, Morrisons, Sainsburys, Somerfield, Tesco, Waitrose, Aldi, Iceland and Lidl UK.

The code is expected to be implemented this year but no date has yet been given.

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