Groceries Code Adjudicator levels criticism at supermarkets over cost price increases

Groceries Code Adjudicator Mark White has set out seven golden rules for supermarket fielding requests for cost price increases.

Speaking in his newsletter, he announced the launch of his annual survey of suppliers, saying that this time he will be asking about retailer responses to supplier requests for cost price increases and about how the designated retailers react to mentions of the Code.
Mr White called on suppliers who have concerns about how their requests are being handled to contact him.

“With rising inflation, the retailers that I regulate are receiving unprecedented numbers of requests for cost price increases (CPIs) from their suppliers. The outcome of such requests is a commercial matter for retailers and suppliers, not a Code issue,” he said.

“But I am conscious of the pressure that the scale of CPI requests creates for both suppliers and retailers, and of the need for a redoubled focus on maintaining and building strong relationships.

“As I have discussed this issue with suppliers and with the retailers’ Code Compliance Officers, I have observed some differences between a good, fair CPI process, and one that could undo the work that has been hard won during the pandemic to build relationships.”

Mr White outlined his seven golden rules seen among retailers who had handled CPI requests well.

1. Clear communication from the outset by retailers about the process and how long it will take;
2. Awareness, and prioritisation, of the possible greater impact on smaller suppliers;
3. Support for buyers from colleagues who have experience of dealing with CPI requests;
4. Only asking for the specific information from suppliers that is needed to make a CPI decision;
5. Clear communication of the outcome, so there can be no grey areas;
6. No automatic delists or fixed delist notice periods following CPI negotiations;
7. Reminding buyers about abiding by competition law e.g. never asking suppliers about other retailers’ plans or retail prices.

He added: “I am looking forward to receiving comprehensive information about this issue from the results of the survey but in the meantime any suppliers who have concerns about the way their requests are being handled should contact me.

“I would be particularly interested in hearing about any examples of unfounded claims that the Code requires suppliers to give fixed notice of any CPI.”