Vertex Law

The Groceries Supply Code of Practice (GSCOP) came into force in February 2010 and sets out clear guidelines for supermarkets to ensure fair dealing with their suppliers. It replaces a previous code of practice and now applies to not just the ‘Big four’ supermarkets, but ten of the majors (Asda, the Co-op, M&S, Morrisons, Sainsbury, Tesco, Waitrose, Aldi, Iceland and Lidl), and more can be designated by the OFT.

The introduction of the GSCOP follows two lengthy investigations by the UK Competition Commission, which also formally recommended the establishment of an independent ombudsman to arbitrate on disputes between grocery retailers and suppliers and to investigate complaints under the new code.

All supply agreements must now incorporate the GSCOP (whether the agreement is based on the retailer’s standard terms, or those of the supplier) and the protections include:

• An overarching fair dealing principle which contains the behaviour of retailers.
• Terms must be in writing.
• Retrospective variations of supply agreements are prohibited (unless such variation are envisaged from the outset).
• There are to be no changes to supply chain procedures, without reasonable notice in writing.
• Payments must be within a reasonable time.
• Retailers may not require a supplier to contribute to marketing costs, unless agreed as part of the supply agreement.
• Retailers may not require suppliers to pay for shelf space (unless made in relation to a promotion).
• Retailers must not over-order promotionally priced goods.
• There are a number of duties on retailers in relation to de-listing.
• An enhanced dispute resolution procedure, which includes the ability to anonymously complain to an ombudsman, who will monitor and investigate complaints (once established).

The ombudsman has not yet been established and, therefore, the question of how compliance with the GSCOP will be policed remains unanswered.

Prior to the dissolution of Parliament, the Government accepted that an ombudsman is necessary to police the new code, not withstanding pressure from the BRC. However, the Grocery Market Ombudsman Bill presented by the Conservatives failed to be fast-tracked through Parliament in the ‘wash-up’ period. New legislation will need to be started from scratch after May 6 and, whilst this is encouraging, in the meantime there is no enforcement body to monitor compliance by the retailers to ensure appropriate force is given to the GSCOP.

Watch this space.

If you'd like help to ensure your terms and conditions are GSCOP-compliant or advice on the best way to do business with your heavyweight customers, contact Sarah Whibley on 01732 224058 or email her.