Asda escaped a fine by the Groceries Code Adjudicator this week - despite its Project Renewal being deemed to have breached the GSCOP code of conduct, The Grocer has revealed.
GCA Christine Tacon published details of a probe dating back to March 2016 on Monday into the approach and implementation of Asda’s Project Renewal range review, launched by former Asda CEO Andy Clarke in 2015.
The Adjudicator revealed how suppliers were given as little as 24 hours, or in one case “overnight” to agree to its demands, including price cuts and one-off payments of as much as 25% of some suppliers’ annual turnover, or face being removed from Asda’s shelves.
Suppliers were also subjected to “aggressive tactics, such as inflexible demands made by Asda buyers”, it found, with “the threat of delisting in the background”.
Tacon’s report concluded that Project Renewal was not conducted in a “wholly code-compliant way” as it breached paragraph 3 of the code.
However, it also revealed Asda, which launched an internal review into its treatment of suppliers, had carried out extensive work and put in place safeguards to make sure it did not happen again, and had also handed back lump sum payments to some of the 226 suppliers involved in the project.
These moves persuaded Tacon not to launch an official investigation into the retailer.
The report also criticised the use of third party consultants, commissioned by Asda to achieve significant cost savings for the business under Project Renewal. Asda worked with Bain & Company to deliver the scheme.
“The GCA concluded Asda appeared to have breached paragraph 3 of the code - variation of supply agreements and terms of supply - by directly or indirectly requiring suppliers to agree to prospective investments that were not provided for in the relevant supply agreement,” said Tacon.
Asda chief executive Sean Clarke said: “The matter raised in the GCA’s case study occurred over a year ago and since then we have significantly strengthened our GSCOP compliance programme.”