Ocado Group and B&M Homestores are added to the CMA’s shopping basket of retailers subject to the Groceries Code
British retailers Ocado Group and B&M Homestores have become the latest grocery traders to become subject to the Groceries Code. The code was created following an investigation by the Competition Market Authority (formerly the Competition Commission) that concluded that many grocery suppliers were being treated unfairly.
The code sets out how grocery retailers should treat their suppliers and aims to make sure that they do not abuse their commercial power. For example, if a retailer is subject to the Groceries Code, they are prohibited from retrospectively changing the terms of supply, or terminating a contract with a supplier without notice and reason. Retailers on the list are regularly monitored and assessed for their compliance with the code.
Ocado and B&M join an already extensive list of retailers subject to the code, including Asda Stores Limited, Tesco plc and J Sainsbury plc. In order for a retailer to be added to the list, a company’s turnover must exceed £1 billion with respect to the supply of groceries in the UK. The independent adjudicator, currently Christine Tacon, has the power to investigate and impose penalties to retailers for their failure to comply with the Groceries Code.
The addition of both Ocado and B&M to the list of retailers subject to the code should have positive implications for their suppliers which are protected from being put under unfair commercial pressure. Suppliers are also encouraged to voice any issues with the retailers who are now subject to stringent requirements, such as not delaying to make payment and ensuring the supplier is provided with full terms and conditions.
The addition of an online retailer to the list is a welcomed recognition of the increase in online grocery shopping as, for many, this modern alternative to supermarket shopping is an attractive way to shop for groceries. As shopping online with internet retailers increases, inevitably so does the demand for produce. Therefore the need to protect suppliers to such companies is just as important as the more traditional retailers. We are likely to see further online retailers added to the list as their presence increases.
Once perceived as a small discount store, B&M now has more than 600 stores in the UK and unsurprisingly, has many suppliers. The addition of B&M to the list acknowledges current consumer attitude towards discount stores and it joins both Aldi Stores Limited and Lidl UK GmbH on the list of retailers subject to the Groceries Code. With consumer demand for discount groceries increasing, further retailers of this nature are likely to be added to the list to ensure that suppliers are not subject to unfair commercial pressure.
It is important that all food suppliers who deal with any of the large supermarkets have an understanding the code, so they understand their legal rights and can report any breaches to the adjudicator, who can take action on their behalf. For more information from Cripps Pemberton Greenish on the Groceries Code see here or here and for guidance from the Groceries Code Adjudicator see here.
If you would like further advice, please contact Tom Bourne on 01892 506099 or firstname.lastname@example.org to discuss your situation.