Multi-channel participation prompts GSCOP clarification

4 minute read
05 June 2014

Morrisons' new multi-channel initiative has caused concern among suppliers and trade bodies alike and prompted another GSCOP (Groceries Supply Code of Practice) clarification.

The Groceries Code Adjudicator has published a third GSCOP clarification in the space of six months.

Morrisons' new multi-channel initiative has caused concern among suppliers and trade bodies alike. It involved asking suppliers "for an optional 'multi-channel status' payment of a set amount per product", adding that, "through multi-channel status suppliers' products would be offered greater exposure and sales opportunity."

Morrisons insisted that those who declined were not penalised, stating that any payment was not a requirement and that if a supplier did not wish to pay, there would be no negative consequences to their existing relationship with Morrisons.

However, as part of this initiative, funds had been taken from 67 suppliers' trading accounts unilaterally without having agreed to participate.

The Groceries Code Adjudicator found that this was a breach of Part 3 of the GSCOP (Variation of Supply Agreements and terms of supply) but added that Morrisons had rectified this breach and reimbursed those suppliers affected.

Crucially, the Groceries Code Adjudicator agreed with Morrisons that the multi-channel initiative was just a request to suppliers for support rather than a requirement to pay a listing fee (where 'Require' is given a defined meaning under the GSCOP) - i.e. the listing fee did not have to be paid for a grocery product to be part of the multi-channel initiative. However, the clarification does demonstrate how online sales are caught within the remit of the GSCOP in the same way as sales in stores.

This clarification suggests that were it not for the unilateral debiting of suppliers' accounts who did not take up the optional payment, Morrisons would not have breached the GSCOP. This is because it was a request rather than a requirement. As highlighted in the Tesco clarification, distinguishing between a 'requirement' and a 'request' can create some uncertainty for both suppliers and retailers.

In an interview with The Financial Times, the Groceries Code Adjudicator stressed the co-operative approach between retailers and suppliers being taken by her office: "We are not trying to catch people out. We are trying to define what [GSCOP] stands for, creating precedents that can help people see how we will do things."

This third clarification demonstrates how the enforcement of the GSCOP is having a direct impact on the groceries' supply chain.

The inaugural annual Groceries Code Adjudicator conference takes place on 23 June. For further details, including registering attendance for the event, please visit the Groceries Code Adjudicator's website.

For detail on the two previous GSCOP clarifications, please see our previous analyses:

NOT LEGAL ADVICE. Information made available on this website in any form is for information purposes only. It is not, and should not be taken as, legal advice. You should not rely on, or take or fail to take any action based upon this information. Never disregard professional legal advice or delay in seeking legal advice because of something you have read on this website. Gowling WLG professionals will be pleased to discuss resolutions to specific legal concerns you may have.

Related   Food & Beverage