Major fmcg companies have claimed Amazon and Boots are fining them up to £100,000 a year - which would be outlawed if they came under the jurisdiction of the Groceries Code Adjudicator.
This week a raft of companies, with a combined turnover of more than £1bn, told The Grocer the companies were able to demand penalties that flew in the face of supplier agreements in place with GSCOP-regulated retailers.
The outcry comes as the government seeks evidence about whether Adjudicator Christine Tacon has enough powers to protect suppliers, with a BEIS consultation due to end next month.
A raft of suppliers contacted The Grocer to say Amazon and Boots had been deducting money from payments owed for products, on the grounds of order errors, even when they were disputed.
Companies also reported being hit with fines, typically around £250 per individual error, for early or late delivery, failed deliveries or missing documentation.
None of the eight suppliers The Grocer spoke to said they had agreed to such unilateral deductions but, unlike companies policed by GSCOP, they did not have to have the ability to complain about fines or changes to their supplier agreements, they claimed. The companies said Amazon and Boots both operated “comply or pay” policies.
One said: “Amazon have been bringing in new charges almost on a whim. There’s no real room for negotiation, it’s a bully tactic.”
Another source said: “Boots has a policy of deducting a fixed fine of £250 for any supply chain discrepancy, irrespective of its true cost. Whereas with grocery retailers we are able to collaborate to resolve many of these issues, there is no opportunity to do so with Boots.”
Another added: “Both Amazon and Boots operate a zero-tolerance policy but there is no reciprocal arrangement for when they reject or delay loads because they are over capacity, or are the cause of the mistakes they fine for.”
Simply Supply Chain director Jonathan Kittow said: “Both Boots and Amazon adopt practices that would not be possible under the fair-trading regulations offered by the Grocery Code.
“As a consequence of the GCA, retailers are only able to fine for these sort of things if a supplier agreement has been created and the suppliers agree to pay.”
“The difference between the other retailers and Boots and Amazon is they don’t have supplier agreements.
“In addition to fining suppliers hundreds of thousands of pounds, they operate on a different playing field to the grocery retailers, which cannot be either fair or reasonable.
“We would urge those presiding over the statutory review of the GCA to expand its remit to incorporate all retailers who sell grocery products to adopt the same standards.”
An Amazon spokesman said: “Amazon strives to build successful, long-term relationships with suppliers and we work with them every day to help them be successful.
“Our websites help businesses of any size reach more than 300 million active customers worldwide, and we have agreements with suppliers that are designed to help them succeed and protect customer trust. If a supplier has questions or concerns about their agreement, they should contact us directly.”
A Boots spokeswoman said: “While the CMA has not designated Boots under the Groceries Supply Code of Practice, we are committed to maintaining positive relationships with our suppliers for mutual benefit and we regularly seek feedback from them to help maintain and strengthen these partnerships.”
Tacon in plea to keep ‘collaborative’ approach
GCA Christine Tacon has urged the government to keep her “collaborative” approach to tackling retailer-supplier disputes when she steps down next June.
Responding to a BEIS statutory review of the role, Tacon said her practical approach had transformed relations “beyond recognition”.
Her evidence follows criticism from the BEIS committee in the House of Commons in May. Then, MPs accused her of trying to duck out of taking on new powers and questioned why she had not been more proactive on issues such as the Sainsbury’s-Asda merger.
But Tacon told small business minister Kelly Tolhurst that since taking on the role in 2013 the “fast practices” of supermarkets had widely disappeared.
“My approach to monitoring and ensuring compliance with and enforcing the code is now well-established and I am confident it delivers results,” she said. “My collaborative approach with the retailers I regulate enables tough, honest conversations and prompt remedial action.”
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