The grocery industry watchdog is hoping to win new powers to oversee Amazon and Boots after receiving numerous complaints about their treatment of suppliers.
Christine Tacon, the Grocery Code Adjudicator (GCA), already oversees 10 retailers including the big four supermarkets – Tesco, Sainsbury’s, Asda and Morrisons – and has the power to issue multi-million pound fines if suppliers are treated poorly.
The competition watchdog is currently assessing a group of up to four additional retailers that could come under Tacon’s remit from August, if it finds their grocery sales amount to £1bn or more.
Amazon’s shift into groceries, after buying Wholefoods Market and teaming up with Morrisons for its Amazon Fresh food home deliveries, is thought to have potentially put it within the GCA’s sights, while Boots’s sale of sandwiches and drinks as well as shampoo, toothpaste and suncream, may also put the health and beauty chain in the frame.
Tacon said she was particularly keen to include those retailers that were treating suppliers poorly while competing directly with the 10 companies she currently oversees.
She said Boots and Amazon were two of the chains mentioned by suppliers. Complaints relating to Amazon had been about not paying in full. Complaints relating to Boots had been about retrospective payments and variation to agreements.
After this article was published, Boots said that there was nothing untoward in such practices, which were standard in the industry. “Payments are always agreed in advance with suppliers and are used for promotional activity to the benefit of consumers,” the company said in a letter to the Guardian.
Tacon said she could not be certain the two retailers will come under her remit as there was “no cast-iron definition” of groceries, and it was difficult to assess the amount of relevant goods they sold.
She said retailers might argue that products such as toothpaste, for example, should not be included, which might take their overall grocery turnover below the £1bn cut-off point.
The potential extension of GCA’s powers comes as Tacon named Asda as the worst of the UK’s big four supermarkets in its treatment of suppliers for the second year in a row.
The Walmart-owned chain did better than the Co-op, which is currently under investigation by the watchdog, and Iceland, which once again hit the bottom of the pile, but sits well behind its major rivals, according to CGA’s survey of 1,000 suppliers.
About 7% of Asda’s suppliers said it rarely stuck to the legally binding industry code which covers trade terms and 1% said it never did so. That compares to just 3% of Tesco suppliers who say it rarely sticks to the code while none said it never complied.
Still, Tacon said Asda had shown improvement in the past year. “I am delighted to report significant improvements across all regulated retailers,” she added.
In one measure of her powers, Tesco, which faced a major investigation by the GCA in 2015, has overtaken Sainsbury’s and Waitrose to become the major supermarket best rated by suppliers, although it still sits behind Aldi, which has come top of the annual survey.
Tacon said she hoped Asda’s dealings with food producers and grocery manufacturers would improve if its planned merger with Sainsbury’s went ahead, because the latter had better systems in place for dealing with suppliers and had consistently scored better in the annual survey.
Nevertheless, she warned that she could not prevent suppliers being squeezed by a new bigger retailer after the merger as she did not have the power to intervene when suppliers were agreeing prices with retailers.
“If a company is prepared to supply something at a lower price who am I to interfere? We end up with better prices for consumers,” she said.
Tacon said she was open to the idea of her remit being extended in some way but warned “I’m not the industry fairy godmother” highlighting she had only been able to improve practices at the supermarkets because her role was clearly defined and backed by strong powers.
She added the vast majority of suppliers now felt that retailers were sticking to the industry code and her “collaborative, business-focused approach” was getting results. The biggest issue faced by suppliers is now a delay in payments which 19% said they had experienced.
• This article was amended on 12 July 2018 to clarify the different types of complaints that Ms Tacon said suppliers had made to her about Amazon and about Boots, and to add Boots’ response.
