Unco-operative! Groceries Code Adjudicator has say on Co-op seeking supplier payments for failure to meet target service levels

2 minute read
26 March 2014

The Groceries Code Adjudicator has published a GSCOP clarification. This is the second clarification issued by the Groceries Code Adjudicator.

Certain suppliers claimed that the Co-operative Group had demanded compensation payments from them for loss of profits arising from a service level breach even though there were no agreed service levels in place and no evidence of breach had been provided.

The Groceries Code Adjudicator queried with the Co-op whether there had been a breach of GSCOP - ie the prohibition on making retrospective changes to supply agreements (paragraph 3(1) of GSCOP).

The Co-op investigated and identified it as an isolated request limited to one buyer in one category. The payment request has been withdrawn by the Co-op and the Co-op buyer has been further trained on GSCOP.

This demonstrates the risk a retailer takes when making demands for payment without demonstrating that the service level had been agreed in advance. It suggests GSCOP can potentially have a real impact on retailers and suppliers.

However, it's worth noting the Co-op's statement that: "We do (and will continue to) ask for loss of profit support but only on individual instances where a suppler does not comply with our terms and conditions". The Adjudicator did not comment on this. Where service levels (and remedies/payments payable if not complied with) are put in place up front in advance and agreed between the Retailer and the Supplier, then that might be enforceable.

For more detail on GSCOP, please see our FAQs, together with our summary of the Adjudicator's guidance on the use of her statutory powers.

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