Tough new code shows supermarkets committed to supplier relationships

4 February 2010

A tough new code of practice demonstrates retailers' commitment to good, long-term relationships with suppliers.

The strengthened and extended Grocery Supplier Code of Practice comes into force today (Thursday). It applies to all the UK's ten biggest grocery retailers – an earlier code covered just the 'big four' supermarkets - and, for the first time, gives suppliers access to independent, binding arbitration.

The British Retail Consortium (BRC) says retailers have invested heavily to demonstrate they are meeting the Code's requirement and are working closely with suppliers to increase understanding of it.

There has been a code of practice for the four largest supermarkets since 2002. It was reviewed by the Office of Fair Trading (OFT) in 2005 and found to be effective. From today (Thursday) the new, extended Code will apply to the ten retailers with a grocery turnover of more than £1 billion a year. The new Code is:

• Regulated by the OFT
• Gives any supplier the right to apply to have an independent arbitrator appointed under the Chartered Institute of Arbitrators' Rules to look into their case, with the initial costs being met by the retailer
• Protects suppliers from being asked for unexpected retrospective payments or being asked to cover the costs of shrinkage (theft).
• Requires much more detail to be confirmed in writing increasing certainty on both sides.
• Requires all the retailers included to have a compliance officer directly responsible for the Code and reporting to the OFT. A retailer in breach faces a fine under the Enterprise Act.

British Retail Consortium Director General Stephen Robertson said: "The effort and money retailers are putting into demonstrating they meet the Code's requirements and informing suppliers shows they accept their responsibilities as major players in the supply chain.

"Retailers want successful, sustainable long-term relationships with suppliers. How else would they get the quantity and quality of goods their customers want?

"The Code is regulated by the OFT and gives suppliers more protection and a new right to independent arbitration if they're unhappy. It will strengthen relationships and give suppliers the confidence they need to plan for the future.

"Now, politicians of all parties need to recognise that these strong and wide-ranging new rules make an Ombudsman unnecessary."

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