The Co-operative Group has admitted it has “fallen short” after it emerged the retailer is being investigated over suspicions it has broken the Groceries Supply Code of Practice.
The code regulates the relationship between supermarkets and their direct suppliers. Groceries Code Adjudicator (GCA) Christine Tacon said she holds a “reasonable suspicion” that the Group may have broken the code through some of its practices relating to de-listing and the introduction of benchmarking and depot quality control charges from early 2016 to at least summer 2017.
According to a statement on the gov.uk website, Ms Tacon took her decision after escalating her concerns with the Group in line with her published collaborative approach to regulation. The GCA has decided that an investigation is necessary to fully understand the extent to which the Code may have been broken and the root causes of the issues as well as their impact on suppliers.
The GCA now needs more information from direct suppliers and others to determine whether the Code has been broken and if so, what further action to take.
Ms Tacon has called for evidence to be submitted by 4pm on 3 May 2018. Her investigation will consider the extent, scale and impact of practices which may have resulted in suppliers being de-listed with no, or short, fixed notice periods unilaterally imposed by the Group without due consideration of published GCA de-listing guidance.
The focus will be in relation but not limited to decisions taken between summer 2016 and summer 2017 as part of a project called “Right Range; Right Store”, says gov.uk.
The investigation will also consider the extent, scale and impact of practices which may have resulted in the introduction of charges without reasonable notice to suppliers. This will include, but not be limited to, the introduction of depot quality control and benchmarking charges to suppliers, especially those with fixed cost contracts.
In addition, the GCA will consider the retailer’s code-related training for its buyers and the culture contributing to the retailer’s approach to code compliance.
Ms Tacon said: “I have previously escalated my concerns with the Co-op as part of my published collaborative approach.
“However, after carefully considering all the information submitted to me, I have decided that an investigation is necessary so I can fully understand the extent to which the code may have been broken and the root causes of the issues that have been raised with me.
“It is now important that suppliers provide me with information to help my investigation. I am looking forward to hearing what they have to say about whether they have experienced any of the issues now being investigated and if so, the impact on them of the Co-op’s conduct. All information I receive will be treated with complete confidentiality.”
In response, a statement from the Group said: “We acknowledge that we have fallen short and have been discussing the two issues raised with the GCA for some months. We have already taken decisive steps in line with our commitment to ensure the fair treatment of all of our suppliers.”
The Group said these actions include:
- Steps to strengthen its systems and processes for the future
- Retraining 450 commercial colleagues in the operation of the code
- Writing to all of its 1,500 direct suppliers to seek information on any delisting decisions that they believe may have been taken without appropriate consultation. “A small number of suppliers have raised concerns which we are working through with them,” it added.
- Reviewing every case where a supplier was charged for benchmarking and quality control. As a result 110 suppliers have been refunded a total of approximately £500,000. “We have communicated in detail with suppliers to explain where and when these charges should be applied,” said the Group.
Jo Whitfield, chief executive of Co-op Food, said: “We care deeply about our relationships with our suppliers and we are very sorry that in these two areas we have failed to live up to our usual high standards.
“We are already addressing the issues with the GCA and our suppliers and we hope the investigation will help bring to light any additional cases so that we can put these right as quickly as possible.”
