By Justine Mensa-Bonsu, Adjudicator, IDRS Ltd, part of CEDR
The Groceries Code Adjudicator Bill
In February 2010 the Groceries Supply Code of Practice was introduced to regulate the relationships of supermarkets and their suppliers. This Code applies to major grocery retailers, being those with a turnover exceeding 1 billion pounds. The Code obliges retailers to “deal fairly and lawfully with their suppliers”; “not vary supply agreements retrospectively, except in circumstances beyond the retailer’s control which are clearly set out in the supply agreement”; and “pay suppliers within a reasonable time”. The Code also limits the power of retailers in a number of respects.
To date a body has not been established to police the Code and ensure compliance however, in the Queen’s speech this week, it was announced that the Government is planning to establish a Groceries Code Adjudicator to enforce the Code. The adjudicator will resolve disputes between retailers and their direct suppliers; investigate possible breaches of the Code and; provide recommendations on changes to the Code.
A senior Government source is reported to have said: “This is about redressing the balance between David and Goliath. We want to give the Davids more powers to ensure they are getting a fair deal.”
ACS (Association of Convenience Stores) chief executive James Lowman said: “We welcome this important step towards a fairer market. When big stores bully suppliers everyone suffers.”
“In the case of small retailers the effect can be the supplier transferring the costs of unsustainable agreements with big customers onto smaller ones. This could be through increased prices, reduced promotional support or simply worsening service standards.”
“In 2008 the Competition Commission recognised that unfair practices in the Grocery market ultimately harmed the consumer. Bringing in this law is well overdue.”
The redressing of the imbalance of power between two parties, as outlined above, is one of many positive attributes of adjudication.
Adjudication has recently been incorporated into CEDR’s services by way of its relationship with IDRS Ltd. IDRS Ltd provides a consumer redress service which very often sees a sole trader or single consumer mount a claim against a large national or multi-national company or organisation. Such a claim would be timely and costly if pursued through the courts but adjudication allows the dispute to be resolved quickly and at low cost. The adjudicator will also seek to redress the balance of power between the parties by ensuring they are on an equal footing and are given the same opportunity to present evidence.
The Government is clearly in support of the adjudication process and clearly retailers and suppliers will be hoping that the Groceries Code Adjudicator is a success.