Negotiation experts have questioned calls by former NFU boss Minette Batters for the Groceries Code Adjudicator’s “golden rules” covering supplier cost price increases to be “enshrined in law”.
One of the recommendations of Batters’ Farming Profitability Review, published in December, was for Adjudicator Mark White’s current advisory set of principles over CPIs, published in January 2022, to be given regulatory teeth.
The review concluded that with the ability for suppliers to negotiate CPIs “fundamental” to the profitability of farming, the rules governing it should be part of the legally binding GSCOP regulations.
White published his rules following what he described as an unprecedented wave of CPI requests from suppliers, with all the major supermarkets signing up to voluntarily abide by them.
They include calls for clear communication from supermarkets about the length of time requests will take, clear communication regarding the outcomes and no automatic delists or fixed delist periods following negotiations.
Batters said in the report: “In 2022 the GCA published a set of ‘Golden Rules’ when dealing with cost price increases (CPIs). This was in response to an unprecedented increase in requests for CPIs due to rising inflation. As these are not regulated by the GSCOP, these rules are only advisory and not legally binding on retailers.
It added that the rules should in future be “enshrined in law”.
However, GSCOP expert David Sables, CEO of Sentinel Management Consultants, told The Grocer the recommendation was “nonsense”.
“It looks like she doesn’t know what she’s talking about,” said Sables.
“You have to be very careful regulating pricing and the minute you get into that it’s a slippery slope to having a very voluminous regulatory piece which means you’re close to removing free marketing competition.
“The code itself purposefully stays away from it.”
Sables said he believed that while elements of the code regarding areas such as delisting requirements and elements of information required could be made legal, the Adjudicator’s golden rules were too vague a set of principles to be transferred into law.
“It’s utter nonsense to think that Minette Batters or Mark White can teach suppliers and supermarkets about the art of communication,” he said.
“I think it would be impossible for it to work.”
Tom Reynolds, CEO of the British Brands Group, said its members had been happy with the GCA’s golden rules in its voluntary form and said any plans to turn them into legislation ”would have to be looked at very carefully”.
“The golden rules are a good example of the Adjudicator taking the initiative at a difficult time to ensure the market remains functional.
“There hasn’t really been a groundswell of calls within our membership to change what we think has been a very effective system, although we are very aware of the strength of feeling in some sectors.”
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