Morrisons has become the latest high-profile retailer to breach the Groceries Supply Code of Practice (GSCoP) by overcharging suppliers.
The UK’s fourth-largest supermarket fell foul of the code after it debited suppliers without their permission. But Morrisons was cleared over plans to make suppliers pay for a prominent showing on its new website.
A spokesperson for the retailer said: “We mistakenly took payments from a small number of suppliers as we rolled out the programme, and these were paid back as soon as we discovered the error. We made these refunds without any prompting.”
Groceries Code adjudicator Christine Tacon said: “This case has set a marker in the sand. Retailers had a lot of interest in it, and were eager to see the outcome.”
The issue started when Morrisons asked suppliers for an optional ‘multi-channel status’ payment of a set amount per product, giving greater exposure to the suppliers’ products. The retailer stated during the selection process that those suppliers not interested in multi-channel status would not be penalised in any way.
However, when implementing its new initiative, 67 suppliers who had not yet agreed to participate had funds debited from their accounts by Morrisons.
This action was in breach of the code, although the retailer has since reimbursed those affected. The GCA also accepted Morrisons’ view that the multi-channel initiative was a request to suppliers and not a requirement to pay a listing fee, and so didn’t breach another part of the code.
Tacon admits GSCoP is still “woolly” in differentiating between ‘request’ and ‘requirement’, but hopes that this will soon change thanks to precedent cases such as this one.
The code covers supermarkets with a turnover of more than £1 billion. There have now been three ‘case studies’ publicised by the GCA office. In March 2014, Tesco was forced to back down from requiring payments for better shelf positioning, while in the same month, The Co-operative identified a rogue buyer who had been seeking supplier payment for failure to meet target service levels
The NFU’s horticulture and potato adviser, Lee Abbey, said: “In these three cases, the retailers admitted that they had not been clear enough with suppliers about what was a requirement and what was simply a request, and that some individuals in their organisations needed further training.
“I’m sure some suppliers will be sceptical about how much the retailers did or did not know about what they were doing, but if these were genuine mistakes then, in theory, they should not happen again. And it was thanks to the GCA’s intervention that these situations were rectified.”
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