Let’s look at the facts. When the role of the Groceries Code Adjudicator was initially discussed in Parliament back in 2013, the BRC argued it would increase costs for consumers but achieve nothing new. Retailers were against the introduction of financial penalties for breaching the code. Then, retailers reported they had incurred significant costs in embedding the framework.
The simple truth is, retailers never wanted the code to be law. They were happy with the previous voluntary arrangements. They were opposed to the role of the Adjudicator and they didn’t want fines to be an available option.
Retailers never have wanted and never will want the scrutiny of an independent regulator. But the same can’t be said for the 10,000 suppliers who work with the 14 retailers to fall under the GCA. And now seems a terrible time for the government to consider scrapping the Adjudicator in favour of a wider remit for the Competition & Markets Authority.
I was a buyer in one of the regulated retailers when the code came in. We expected things to change immediately. We thought we would have to behave in a different way and do things differently.
They didn’t, so we didn’t. When Christine Tacon ran her first GCA survey in 2014, 79% of suppliers said they had experienced a code-related issue.
In this year’s survey, that figure has fallen to 53%. The impact of 12 years under an Adjudicator are clear.
Granted, you could look at it another way: over 50% of suppliers are still experiencing code-related issues. Some retailers have even gone backwards. Compliance fell in eight of the 14 designated retailers this year and the two retailers propping up the bottom of the survey had their worst compliance for over five years.
But now is not the time to scrap the system. We have inflation at record levels, and relationships between retailers and suppliers are under huge strain as the mults insist on launching their biggest-ever price campaigns. It is hard to imagine the rationale behind scrapping the independence of the GCA and rolling it into the CMA during a cost of living crisis.
The government has made noises about cost savings and efficiency. But the GCA is fully funded by a levy, paid for by the 14 retailers, and it is already in joint offices in Canary Wharf with the CMA. So how will rolling it into the CMA save costs?
It is also hard to see how it will drive efficiency. The GCA has one role: to ensure the 14 designated retailers comply with the code. The CMA has a far more wide-ranging and less defined role.
The GCA been effective in curtailing the wild west antics that existed before the code was written into law. Now, it faces its greatest challenge since its inception. Not all retailers are consistently treating all their suppliers in a way that is fair and lawful. We can expect the number of arbitrations to go up as the strain between retailers and suppliers reaches breaking point.
So now more than ever, we can’t afford for the role of the GCA to be diluted. If the retailers sense any loosening of the code, they will jump at the chance to take advantage – and ultimately, that is not good for the consumer.
No comments yet