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’s farming operations, has been tasked with ensuring the UK’s biggest 10 supermarkets with a turnover of more than £1billion abide by the grocery code.
The code, which became law in February 2010, 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.
Speaking at the North East Farm Management Association dinner in Aberdeen this week, Ms Tacon made a plea for suppliers to speak out about any unfair practices they were experiencing.
“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 the future of 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 over 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 any retailers found to be in breach of the code, following an investigation by her team.
The maximum fine level is yet to be decided by government, however in a consultation Ms Tacon proposed fining retailers 1% of turnover. This would equate to £500million in the case of Tesco.