The UK will today (4 February) begin to implement a new code of practice to supervise the relationship between retailers and suppliers.
While a code of practice has overseen the dealings of the country’s four largest supermarkets with their suppliers since 2002, the Office of Fair Trading decided it was an ineffective mechanism to protect suppliers.
Go deeper with GlobalData
The new strengthened Grocery Code of Practice will be administered by the OFT and is applicable to the largest ten food retailers in the country.
Under the code, suppliers will have the right to appeal to an independent arbitrator in disputes. It is also designed to protect them from unexpected retrospective payments or being required to cover the cost of shrinkage.
Retailers will also be required to demonstrate compliance with the code to the OFT, necessitating the appointment of a dedicated compliance officer and requiring that agreements are formalised in writing.
If a retailer is found to breach the code, they will face financial penalties under the Enterprise Act.
“We believe that this new, stronger code will go some way to protecting suppliers from unfair practices that are all too common in the industry,” a spokesperson for the OFT told just-food.
