Lidl is facing a £2.6m court claim after being accused of multiple breaches of the Groceries Supply Code of Practice (GSCOP), in what is believed to be the first time a supplier has taken a supermarket to court since the code came into force in 2010.
The Grocer can reveal the discounter is being sued by its former fresh food supplier Proctor & Associates Ltd, which claims it has had to stop trading after Lidl delisted a raft of its products without notice and went on to poach its own suppliers.
At the height of their relationship, Proctor & Associates, which was based in Boston, Lincolnshire, supplied Lidl with 57 different lines of fruit and veg.
According to documents filed at the High Court in London last month, that included a contract to provide asparagus between 2008 and 2018.
In the year ending April 2016 the retailer placed orders totalling almost £700,000, but the claim alleges this was later significantly reduced without any notice over the course of three years.
By April 2019 it had reduced the volume of its purchases to just £306,000 and then ceased buying from the company at all.
Leading retail and grocery law firm Gordons LLP, which is representing the claimant, accuses Lidl of using the requirements of the fresh produce sector to have a traceable supply chain to directly contact Proctor & Associates’ suppliers, Cobrey Farms and Wye Valley Produce, “thereby cutting the claimant out of its own supply chain, established over many years”.
Proctor & Associates also supplied Lidl with celeriac for 12 years between 2006 and 2018, at which point Lidl is accused of stopping purchases without any written notice, before going on to source the product directly from the claimant’s grower through a third party.
Similar accusations are made concerning the supply of chillies between 2015 and 2019, and mini vegetables between 2008 and 2019.
Lidl is accused of similar tactics for mixed squash, which the company supplied for 11 years, until 2019, when Lidl allegedly stopped its orders without notice and used a third party to source the product from Proctor & Associates’s main supplier, RE Stacey. It entered a similar relationship for the supply of corn on the cob.
Also, in 2019 Lidl is said to have gone directly to the company’s main supplier for veg used in soups and stews, Frederick Hiam Farms, to cut Proctor & Associates out of the loop.
The claimant supplied the defendant with prepacked vegetables to be used to cook stews and soups for 10 years between 2009 and 2019 and sourced that produce predominantly from Frederick Hiam Farms.
The list of accusations also involves the supply of pumpkins between 2004 and 2018.
The court papers say: “The defendant placed its last order on 26 October 2018 and thereafter sourced pumpkins direct from growers (including the claimant’s grower) only informing the claimant of that in August 2019 – well into the growing season and too late for the claimant to make alternative arrangements to supply to others.
“Moreover, in breach of the defendant’s obligation of fair dealing, the claimant understands that the defendant had approached the claimant’s supplier, Oakley Farms, and informed it that the claimant would no longer be supplying the defendant and invited the claimant’s supplier to supply pumpkins directly, the consequence of which was to cut the claimant out of its own supply chain.”
A series of other products, including apples, pears, plums, broccoli and cauliflower are all cited in the case.
Lidl stands accused of breaching paragraph 16 of GSCOP which requires retailers to provide reasonable notice of decisions to delist, including written reasons.
It is also accused of breaching Paragraph 2 of the Code which states: “A retailer must at all times deal with its suppliers fairly and lawfully.”
“The claimant has lost profit that it would otherwise have earned during the notice periods to which it was contractually entitled in the total sum of £2,153,425.43,” states the claim.
Since 2013 GSCOP has been policed by the Groceries Code Adjudicator (GCA), which under former adjudicator Christine Tacon carried out two formal investigations: one into Tesco’s financial accounting scandal in 2015, and one in 2018 into the Co-op over the delisting of suppliers without proper notice. Neither were fined.
However, the number of arbitrations involving the GCA has increased significantly in the last two years. In a GCA survey of 2,500 suppliers, published in June, one in five suppliers said they had an issue with products being delisted without reasonable notice. Lidl came last in the survey.
And earlier this month current adjudicator Mark White revealed he had “intensified” talks with supermarkets amid concerns about cost price increase requests being delayed or leading to products being delisted without reasonable notice.
A Lidl spokeswoman said: ”We are in the process of reviewing the claim and will be responding in due course.”
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