‘Frightened’ UK grocery brands slow to report retail dirty dealing

Christine Tacon, who became the UK’s first grocery code adjudicator (GCA) in June 2013, is charged with investigating potential breaches of a 2010 Code of Practice, which is enshrined in law.

Her office, funded by a levy on retailers with a UK turnover of £1bn+, regulates their direct supplier relations after the government found in 2008 that some transferred excessive risk and unexpected costs to this group.

Both retailers and suppliers (including those based outside of the UK) can apply to the GCA to arbitrate in disputes, and Tacon has the ability to fine the UK’s largest retailers – Aldi, Asda, The Co-Operative, Morrisons, Iceland, Lidl, M&S, Tesco and Waitrose – if she discovers breaches of the code.

A spokesman for the GCA told BeverageDaily.com this morning that the UK had "taken the lead"​ on such issues, and there was interest from other countries in establishing similar bodies; she said the EU had also drawn up a voluntary code that also covers indirect suppliers.

But speaking at last week’s PPMA show in Birmingham, UK, Tacon warned that many suppliers were scared of blowing the whistle on their powerful retail customers.

‘People worry there will be retribution’ – Christine Tacon​

“People are frightened to tell me. We did a survey where 80% of suppliers said they had experienced breaches of the code,”​ Tacon said. Unfair supply chain practices can touch on marketing costs imposed on suppliers, payment delays, forecasting errors, de-listings and supply agreement variations without notice.

“But only 38% of them would tell me – this is largely because people worried that there would be retribution, if it got found out, or that I wouldn’t do anything, which I was particularly insulted about because I will do something!” ​ she added.

“It’s just a fear – because although I have a legal duty to protect their anonymity, if you only supply two retailers, and you’re telling on one of them, there’s just this fear – ‘What if that information gets back?’​”

Tacon admitted that if only one supplier complained about retailer malpractice she was unable to act, since she was unable to protect their anonymity.

“But if I’m hearing the same issue raised by a toilet roll supplier, an apple supplier and a whisky supplier, that starts to make me think I need to follow that up,”​ she said.

Tacon claims she is making progress in getting retailers to address the five key issues (see chart, left) where she receives supplier complaints: third-party audits, delivery performance, forecasting/service levels, lump sum payment requests, and packaging/design charges.

No win, no fee auditors one supplier scourge…​

“One of them is the retailers going back up to six years through emails, with third party ‘no win, no fee’ auditors, looking for any evidence that a supplier could possibly owe them money, even if there’s only ambiguity in terms of what’s written in the email,”​ she said.

“And then slapping an invoice on the supplier and threatening to deduct it if they didn’t cough up. That was a big issue that was cropping up and I’ve managed to get 8 of the 10 retailers to voluntarily agree that instead of going up to six years, they will have everything sorted within two,”​ Tacon added.

“What it’s doing is putting the suppliers under a huge amount of pressure to go and find the evidence and, of course, they then go looking for claims going the other way. So it just becomes a hugely inefficient impact on the chain,”​ she said.

Click here to read more about the GCA​, its remit and recent publications from the office.