Groceries Code Adjudicator Mark White has called on supermarkets to take action to prevent buyers demanding their suppliers “pay to stay” on shelves.
The Adjudicator has also warned grocery retailers they must be able to prove their behaviour on delists is code-compliant in the event of future disputes.
It comes after White held a series of meetings with all the major supermarkets in the past few weeks, but the move is being interpreted by experts as a warning shot to Tesco after its introduction in March of new fulfilment fees, aimed at getting suppliers to pay for using its online and Booker wholesale services.
As The Grocer exclusively revealed at the time, Tesco initially told suppliers they could be delisted if they failed to take part. It has since repeatedly stressed the scheme is voluntary.
Tesco is also carrying out a a major cross-category range review across its entire fresh and packaged food lineup under a new reset programme called Fit for Growth.
White stressed the restrictions in the code on requiring suppliers to take certain actions, including paying as a condition of being a supplier.
He told The Grocer: “I am determined to ensure that all 14 retailers are treating suppliers fairly and lawfully.
“I told all the code compliance officers that retailers generally should not be requiring suppliers to take certain actions, such as paying to remain a supplier, where that is not permitted under the code.
”If I believe that a retailer may have required an action that it should not have, I will challenge them to provide evidence that this is not the case.”
White has told supermarkets that they must ensure retailer processes, including training, briefing, and oversight of those communicating with suppliers, must be such that there is no requirement for pay to stay.
He also told them in writing that they should be able to “provide evidence” that their activity is in line with GSCOP.
“I want to hear from any supplier who believes that they might be subject to a requirement to take an action in contravention of the code,” White added.
GSCOP and negotiation expert Ged Futter, founder of The Retail Mind, told The Grocer the Adjudicator’s warning was timely. The twin impact of Tesco’s range review and its call for fulfilment fees were “just starting to come through” he said.
“Suppliers I’ve spoken to are saying Tesco are saying ‘we want all investments to be into case costs’.
“That is not going to go down well with suppliers, who would in some cases be prepared to invest but would want a range of different options, such as promotional spend and other tools, rather than simply handing Tesco money to invest as it likes.
“As a supplier if I’m giving you a lower case cost I want higher volume.
“I think Tesco is going to come up against some very difficult conversations with their suppliers but the push is only going to come to shove with the Adjudicator is it starts delisting suppliers as a result.”
Tesco declined to comment, but sources stressed the GCA communication had gone to all supermarkets.
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