The Groceries Code Adjudicator will be advising on evidence in a landmark High Court hearing, in a move that could have huge implications for suppliers claiming to be unfairly delisted by retailers.
A judge this week ruled that Adjudicator Mark White should be allowed to intervene in the case pitting the discounter Aldi against its former sprout and brassica suppliers, John Clappison and Matthew Rawson.
The extraordinary move comes with just days to go before the Adjudicator is due to release the findings of his 2025 suppliers’ survey.
In December, The Grocer revealed Aldi was facing an unprecedented intervention by the GCA after it was accused of effectively forcing the closure of W Clappison Ltd (WCL), one of its longest-serving suppliers.
In March, lawyers for Aldi and the GCA clashed over whether the regulator should be allowed to give evidence in the case. Aldi’s lawyers argued the Adjudicator should not. They claimed his intervention would heap unnecessary complexity and costs on the trial and could be a “partisan” move.
But this week, after deliberating for more than four months, deputy master Bowles ruled that White would be allowed to have his day in court, with the case now set to go to trial next April.
Short notice delisting
The developments are being seen as a potentially seismic moment for the Groceries Supply Code of Practice policed by the Adjudicator, whose looming survey will focus on issues including short notice delisting.
GSCOP rules on reasonable notice periods state a retailer is required to consider all circumstances, including the duration of supply; the characteristics of the relevant groceries; the value of the order relative to the turnover of the supplier; and the overall impact on the supplier.
The farmers in Aldi’s case, who ran Yorkshire’s last sprout and brassica farm, are suing the discounter for losses of £3.7m, claiming they were delisted without due notice and in direct contravention of GSCOP.
The GCA’s lawyers told the judge in February that GSCOP was the “gold standard” of deciding such matters and should be “front and centre” of the case.
Lawyers for the farmers claim that Aldi repeatedly assured WCL it could have confidence to invest in its operations. It was then contacted by the retailer to say it had not won any business for the season.
The High Court case is only the second time GSCOP has been the basis of a hearing in the High Court, and is the first time the GCA has been actively involved in proceedings.
In 2022, another discounter, Lidl, was sued for £2.6m by a fruit & vegetable supplier, which claimed it was wrongly cut out of deals by the discount chain in moves that “destroyed its business”.
Proctor & Associates, which once supplied Lidl with up to 57 different kinds of fruit & veg, claimed it had to stop trading after the discounter delisted a string of its products without notice and poached Proctor’s suppliers.
The case was eventually settled out of court.
Aldi’s case law fallout
Sources claim the outcome of the new court case could have “huge ramifications” across the food and drink sector, with future cases likely to take into account whatever the court decides based on the GCA’s intervention.
There is speculation that if Aldi loses the case it could face a flood of cases from other suppliers, though the discounter strongly defends its actions.
The extraordinary events in the High Court come as ministers are reviewing the performance of the regulator.
A consultation by the Department for Business & Trade noted that suppliers had experienced fewer code-related issues with large retailers between April 2022 to the end of March this year, including a reduction in issues around cost price increases. However, some compliance issues remained, most notably with online giant Amazon.
White has threatened to launch an investigation into the online giant over its behaviour, including alleged delists without proper notice, unless it takes action to improve its practices.
Amazon claims it has overhauled its procedures but the survey is likely to prove a crucial test.
‘The merit of objectivity’
As part of the ruling in Aldi’s case, the judge said the CGA’s intervention will, from the perspective of the court, ”provide, in respect of the proper interpretation of the code and of the incorporated terms of the code, the merit of objectivity”.
“His involvement in the litigation will not be to provide ad hoc guidance in respect of the instant case, but to provide the court with a wider overview of the intent and purpose of the code and of the potential effect of particular constructions of the code, in circumstances extraneous to the instant case, and, thereby, to assist the court in the proper construction of the code and the incorporated terms in the context of the current case.
“The day-by-day experience of the GCA, in applying the code, in providing guidance to retailers and suppliers as to the workings of the code, in particular situations, and in acting as an arbitrator in respect of the code will, as it seems to me, be of real assistance to the court in its consideration of the impact that a particular interpretation of the code might have upon situations and circumstances other than those of the instant case.
“While the GCA cannot give evidence, he can, based upon experience, point to the weaknesses, or strengths, of a particular construction of the code when tested against other circumstances in which the code and the incorporated terms will be in play.
“In that context, I can see no reason why the GCA should not be able to identify, for the benefit of the court, areas of evidence which, whether generally, or in specific circumstances are likely be relevant in the application of a given construction of a particular element, or part, of the code, or why the GCA should not be able to take that course in regard to the circumstances of the instant case.”
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