The ability of the Groceries Code Adjudicator to bring Amazon into line has been questioned after ministers launched a review into the performance of the regulator.
A consultation published last week by the Department for Business & Trade (DBT), notes that suppliers have experienced fewer code-related issues with large retailers during the period covered, from April 2022 to the end of March this year, including a reduction in issues getting through cost price increases.
However, Justin Madders, minister for employment rights, competition and markets, said in his foreword to the probe that “some compliance issues remain, most notably with Amazon”.
Amazon’s perceived code compliance score from suppliers slumped from 59% in 2023 to 47% in last year’s GCA survey.
Mark White, who was appointed in October 2020 and reappointed in May 2024 for a further three-year term, has repeatedly warned that unless Amazon can urgently respond to the concerns, he will launch an investigation.
The Adjudicator has powers to fine a retailer up to 1% of its annual turnover if it finds the retailer has breached the code.
In December, The Grocer revealed Amazon had carried out a major overhaul of its rules of engagement in a bid to ward off GCA action, including relaunching a supplier dashboard dealing with disputes over “shipment variances” and offering concessions to suppliers over proof of delivery.
The looming result of the Adjudicator’s next supplier survey, due to be published in the next few weeks, is being seen as pivotal in whether it launches an investigation into Amazon. Experts have predicted the online giant would in turn launch a massive legal fight against any such action.
British Brands Group director John Noble praised the record of White since he took over from Christine Tacon, but said tackling Amazon posed his greatest challenge.
“His dealing with Tesco over its introduction of a fulfilment fee for dotcom and Booker deliveries is a clear example.
“However, the problem of disputed shortages and the related charges levied by Amazon presents the greatest challenge the GCA has faced in its 12-year history.
“Delays in payment have been taking place at scale for over two years now and continue to this day, with the GCA so far being unable to encourage Amazon to make substantive improvements.
“Suppliers should be paid in full for the products they deliver to retailers. If a retailer is unable to demonstrate factually and transparently that the delivery was short, no deductions should be made against suppliers’ invoices.”
Ged Futter, founder of The Retail Mind, said the forthcoming survey would be a key moment for the future of the GCA’s relationship with Amazon.
“The survey is going to be crucial. The big question will be ‘has there been any step up with compliance since last years result?’
“But I also wouldn’t be surprised if others have stepped backwards in the past 12 months.”
CMA absorption still on the cards
There are also lingering fears the government might seek to revive previous proposals to absorb the GCA into the Competition & Markets Authority as part of the government’s so-called “bonfire of the quangos”.
However, the fact that the GCA is funded by a levy on the retailers it polices, experts said, meant it would not present ministers with a chance to make sweeping savings.
Futter added: “The GCA is necessary and doing a good job.
“It absolutely must not be rolled into a bigger body, that is the last thing suppliers need at the moment.”
The DBT said: “The previous three reviews have found the GCA to be effective in enforcing the code. The last decade has seen significant developments in the groceries market, including the continuing growth of online shopping and the increased use of technology by large retailers.
”Given these changes, the government is keen to understand if the current model is the most effective and efficient approach.”
No comments yet