December 19, 2012

Gordons’ retail expert says threat to fine supermarkets was expected

A leading retail sector lawyer has said the announcement major supermarkets could face fines for infringing an industry code of practice comes as no surprise to leading retail experts.
    
Matthew Howarth, head of Gordons’ commercial litigation team, was reacting to Competition Minister Jo Swinson’s statement that the new Groceries Code Adjudicator Bill will give the Adjudicator “more teeth” and and enable the Adjudicator to impose financial penalties on large supermarkets infringing the Groceries Supply Code of Practice (GSCOP).

Implemented in February 2010, GSCOP is intended to ensure the 10 biggest retailers  do not take advantage of their dominance and prevent innovation and investment by suppliers. It imposes obligations on such retailers broadly covering: fair dealing; variations to supply agreements, prices, payments, promotions and de-listing.

Matthew said: “We have known for over 18 months that fines could be imposed under the forthcoming Groceries Code Adjudicator Bill. What we are really waiting for is for the level of those fines to be determined and the guidance which explains when such fines can and should be imposed” Business secretary Vince Cable will be able to determine the level of fines once the Groceries Code Adjudicator Bill has been brought into force.      

Any fines will be imposed on the supermarkets, all of which have annual turnovers of more than £1bn, by the forthcoming Groceries Code Adjudicator. This official is being put in place primarily to arbitrate on complaints made by suppliers and to ensure retailers comply with GSCOP. The bill needed to establish the adjudicator was going through Parliament at the time of Ms Swinson’s announcement.    

Describing the procedure for raising GSCOP complaints, Matthew said: “At the moment, disgruntled suppliers have to take up relevant issues with the supermarkets themselves initially. They can only be referred to an independent arbitrator if the supermarket does not resolve the supplier’s concerns.  The new Groceries Code Adjudictors Bill will allow suppliers to complain about a retailer directly to the adjudicator. The 10 retailers are required to submit annual reports to the Office of Fair Trading, detailing compliance with the code, any alleged breaches of it and disputes with suppliers. They also post summaries of these documents on their websites.”   

Gordons has been advising leading food and drink retailers and producers successfully for over 100 years. The firm’s retail experts regularly assist leading industry players on subjects such as regulatory issues, commercial dispute resolution and a wide variety of property transactions.

If you need expert advice on the operation of GSCOP or any other retail sector issue, please contact Matthew Howarth via 0113 227 0379 or matthew.howarth@gordonsllp.com