Alyn Smith MEP, Scotland’s only voice on the European Parliament’s Agriculture Committee, has today repeated his demands for an investigation into the supply chain and the creation of tougher regulations.
Newly-released guidance from the Groceries Code Adjudicator (GCA) will provide clarification to help suppliers understand the process of being de-listed by a supermarket. Broadly speaking, de-listing is used by supermarkets to drive prices down by threatening to no longer buy a supplier’s product.
The GCA’s clarification refers specifically to the interpretation of the phrases: “significantly to reduce the volume of purchases made” and “reasonable notice” in the event that a case comes to arbitration before the GCA.
“These poorly defined phrases have long needed clarification. But the GCA wants to review everything on a case-by-case basis, not create a set of rigorous rules to protect suppliers.
“We need to overhaul the legal framework of the food supply chain. For example, Premier Foods forcing suppliers to pay for the privilege of doing business with the firm was entirely legal because, while the UK Groceries Code states that suppliers shouldn’t have to pay a listing fee except in relation to a promotion or a new product, Premier Foods is technically a manufacturer, not a supermarket.
“These loopholes created by the vagueness of the rules are causing major problems, and we need clarity and rigor from a potent regulator. This is precisely the opposite of what the GCA is and has been providing. These definitions are vaguely written and leave as much wriggle room for supermarkets as possible.
“For instance, although it is laudable that they should take into account ‘the speed, ease and extent to which the supplier can switch to supplying an alternative customer without loss of profit’ the framing of this as simply one factor means that it can be ignored.
“Crucially the guidance does not protect farmers since it does not address how supermarkets can, simply through the threat of de-listing suppliers, affect the market price.
“I’ve previously written to the Competition and Markets Authority (CMA) to request a full and formal investigation into the abuse of market power by the big supermarkets. I have little faith that our farmers will receive any meaningful help from the GCA.
“Today is further proof, if any were needed, that the supply chain is weighted heavily against suppliers. We need strong action, a review of competition law, and a strong external ombudsman to oversee the supply chain. In short, we need real regulation that will protect suppliers from the supermarkets and correct the huge imbalances that exist in the market.”