The Co-operative Group is flexing its new-found muscles following its acquisition of Somerfield by demanding backdated trading terms from suppliers.
The Grocer has learnt that the society sent an email to suppliers last week asking them to "propose an improvement to trading terms effective March 1st 2009, in recognition of the new enlarged business".
Suppliers have reacted furiously to the proposed changes to terms, which would date back to the 1 March completion of the Somerfield deal, accusing the society of bringing in retrospective changes under the wire.
The Competition Commission is currently working on a strengthened and extended Grocery Supply Code of Practice that would outlaw such changes. Its consultation on the GSCOP has now closed and a final order is expected to be published in two months.
Its groceries investigation ruled that making retrospective changes to terms increased uncertainty among suppliers. This would jeopardise suppliers' ability to "fund investments for the development of new products or capacity, or improved production processes, leading to lower product quality and fewer new product offerings".
One supplier said: "With the merger complete, the Co-op is hauling in suppliers to demand improved terms. This is not unexpected, but we were not expecting them to backdate trading terms. Perhaps this was naive of us."
Another supplier questioned why improved terms were necessary. "If suppliers were already dealing with the Co-op and Somerfield, they are not exactly going to be doing much more business," he said. "The only change they will notice is delivering to a different depot."
The Co-op Group refused to comment on negotiations but a spokesman said: "We announced at the time of the acquisition we were negotiating improved terms with our suppliers that are in the long-term interests of our suppliers, our business and our customers."
The Grocer has learnt that the society sent an email to suppliers last week asking them to "propose an improvement to trading terms effective March 1st 2009, in recognition of the new enlarged business".
Suppliers have reacted furiously to the proposed changes to terms, which would date back to the 1 March completion of the Somerfield deal, accusing the society of bringing in retrospective changes under the wire.
The Competition Commission is currently working on a strengthened and extended Grocery Supply Code of Practice that would outlaw such changes. Its consultation on the GSCOP has now closed and a final order is expected to be published in two months.
Its groceries investigation ruled that making retrospective changes to terms increased uncertainty among suppliers. This would jeopardise suppliers' ability to "fund investments for the development of new products or capacity, or improved production processes, leading to lower product quality and fewer new product offerings".
One supplier said: "With the merger complete, the Co-op is hauling in suppliers to demand improved terms. This is not unexpected, but we were not expecting them to backdate trading terms. Perhaps this was naive of us."
Another supplier questioned why improved terms were necessary. "If suppliers were already dealing with the Co-op and Somerfield, they are not exactly going to be doing much more business," he said. "The only change they will notice is delivering to a different depot."
The Co-op Group refused to comment on negotiations but a spokesman said: "We announced at the time of the acquisition we were negotiating improved terms with our suppliers that are in the long-term interests of our suppliers, our business and our customers."
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