GSCOP – The toothless watchdog develops some dentures

When Christine Tacon took up her position as the Groceries Code Adjudicator in January 2013, she must have wondered why the phones were so quiet and her inbox all but empty.

Born out of the last Labour Government’s attempts to protect small producers from the perceived overpowering might of the supermarkets, but in reality, more an exercise in wooing Tory votes in traditional blue farming constituencies, the Groceries (Supply Chain Practices) Market Investigation Order 2009 came into force in 2010

Three years later, now under a Conservative-Liberal Democrat Coalition Government the original plan for a powerful ombudsman (think OFWAT, OFCOM, OFTEL etc) to oversee the buying practices of the supermarkets was diluted down to an adjudicator with the power to just arbitrate and investigate but not to impose fines (until January 2015).

Add to that the slightly bizarre situation that, as a supplier, if you believe you have been wronged by a supermarket under the code your first point of formal complaint is back to the very supermarket that allegedly abused you – the equivalent of being mugged in a back alley and not being allowed to phone the police but having to politely approach the mugger and ever-so-nicely ask for your money back!

Hardly surprising then that Tacon’s phone and email inbox remained so quiet during those early months of her tenure – suppliers were, quite rightly, too scared to bring up any possible code infringements for fear of supermarket reprisals either immediately or at some point down the line.

So stuck with a code that had no teeth and more holes to wriggle through for supermarkets than a colander, what was any enterprising adjudicator to do? Sit back, write some lengthy reports, lobby government for change, enjoy the civil service remuneration package? Or get on with job with the tools in hand a make some real change to the way supermarkets treat their supplier base?

The much publicised Tesco financial scandal of 2014/15 did a lot to wake up, not just Tesco, but the whole supermarket sector to some of the less than ‘perfect’ buying practices adopted by some of their commercial teams. But quietly, almost in the background, the adjudicator was invoking the ‘spirit of the code’ and being ‘minded’ to point out to supermarkets where she thought there were improvements and changes to be made.

Crucially and very astutely she realised the chances of invoking a full-blown prosecution under the code were pretty slim – the code had been systematically watered down through its travels from consultation document to legislation. Why? Well, intended as already mentioned as a sop to the farming community by a Labour government, the fractious coalition government of 2010-16 realised that important as the farming community was as a lobby group, there is a much, much bigger and far more important lobby group out there that determines governments fates – the electorate! And what do electorates tend to vote governments into (and out of) power on? Yes, the economy!

So, no government would want to prevent the supermarkets doing what they actually do very, very well – keep prices, and especially food prices down. Just look at the supermarket sector’s net profitability, it’s about 2%, meaning that for every £1 supermarkets wring in whatever way out of their suppliers, 98p of it gets invested into cheaper prices for shoppers.

As a result, there is nothing in the grocery code that prevents a supermarket asking for any sized forward-looking cost price reduction – as long as its without duress (?!) and all suppliers are treated equally and fairly (?!)

So, what have been the results of the adjudicator’s somewhat stealthy approach? Well she has been making real and meaningful change without having to resort (yet) to fining guilty supermarkets 1% of their UK operational turnover.

By getting out into the supplier base, talking to suppliers, holding events and promising anonymity by ‘pooling’ common infringements she is made aware of into generic ‘top issues’, she is slowly but consistently enacting real change – drop and drive charges, forensic auditing, third-party tie-ins for artwork, design and sampling and payments for better shelf positioning. All these are examples where through what she self-styles her ‘collaborative’ approach retailers covered by the code have changed and improved for the better their commercial relationships with suppliers.

Using phrases such as being ‘minded to believe that this action breaks the spirit of the code’ she has been able to name and shame supermarkets into real change without resorting to what would otherwise be a series of cumbersome, lengthy, expensive and undoubtedly hotly contested legal battles.

So, a true example of British success through patience, hard work, astute political awareness and agreed compromise – perhaps the House of Commons could learn a few lessons…?

Making Business Matter is a soft skills training provider to the UK grocery industry, helping suppliers to win more business.

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