Suppliers who feel they are suffering unfair trading practices at the hands of the retailers must speak out rather than suffering in silence, the groceries code adjudicator has said.
Christine Tacon, who previously headed up the Co-operative Group’s farming operations, has been tasked with ensuring the UK’s biggest 10 supermarkets with a turnover of more than £1 billion abide by the grocery code.
The code became law in 2010. It prohibits any change in supply agreements without notice. This includes payment terms, limits on payments for shrinkage or wastage, compensation for forecasting errors and demanding a lump sum after a deal has been agreed.
At a North East Farm Management Association dinner in Aberdeen she made a plea for suppliers to speak out about any unfair practices they experienced.
“Suppliers have got to tell me what is going on,” she said.
“Your anonymity is guaranteed and I will only respond when I hear something quite a few times.”
She said there was still a culture of fear among suppliers, who felt failure to meet some demands from retailers would jeopardise their supply contracts.
Although reluctant to name and shame any specific retailers, Ms Tacon did admit the ones with the worst financial performance were the same ones repeatedly appearing in the complaints landing on her desk.
She said she was receiving a large number of complaints about hefty payment requests sometimes in the region of £400,000 to suppliers following forensic analysis of accounts for the previous six years.
Retailers, said Ms Tacon, were using no-win, no-fee auditors to sift through accounts and correspondence with suppliers to find discrepancies where they can recoup cash.
Ms Tacon has the power to fine retailers found in breach of the code after an investigation by her team.
The maximum fine level is yet to be decided by the Government.
However, in a consultation, Ms Tacon proposed fining retailers 1% of turnover. This could equate to £500 million in some cases.