Aldi has settled out of court with one of its suppliers in a historic High Court case which experts say could have major implications for the Groceries Supply Code of Practice (GSCOP).
The Grocer can reveal that on 1 October the court ordered a stay (halt) to all action in a case pitting the discounter against its former sprout and brassica suppliers, John Clappison and Matthew Rawson, after recording that they had come to a “confidential settlement”.
The outcome follows a court judgement in July that paved the way for Groceries Code Adjudicator Mark White to advise on evidence in the landmark hearing.
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, with Aldi’s lawyers arguing it could be seen as a “partisan” move.
After deliberating for more than four months, deputy master Bowles ruled that White would be allowed to advise on the evidence, which saw Aldi sued for £3.7m by the farmers, who ran Yorkshire’s last sprout and brassica farm and claimed they were delisted without due notice and in direct contravention of GSCOP.
Implications for industry
The case, which had been due to go the a final High Court hearing next year, will not go any further after the settlement, though legal sources said it could have major implications for both suppliers and retailers.
“Suppliers and their lawyers will be looking at this without any doubt,” said one legal source. “It does not create quite such a test case as could have been the case if Aldi had gone all the way and lost. But the outcome suggests that should the Adjudicator wish to intervene in future cases, he will be waved in by the court.
“No doubt Aldi may have cause to look at its practice as a result.”
Lawyers for the farmers claimed Aldi repeatedly assured WCL it could have confidence to invest in its operations, only to later 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 the first time the GCA has been actively involved in proceedings.
In 2022, another discounter, Lidl, was sued for £2.6m by a fruit and 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 and 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 also eventually settled out of court.
The Aldi case could prove to be an even more important moment for GSCOP, with the Adjudicator actively involved in the case.
The Adjudicator’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 between Aldi and its supplier.
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.
Both Aldi and lawyers on behalf of the farmers declined to comment when approached by The Grocer.
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