Co-op refunds suppliers as GCA probe is launched

The Co-op has refunded a total of £500,000 to 110 of its suppliers following a review of cases where suppliers were charged for benchmarking and quality control.

The retailer is facing an investigation into the way it treats its suppliers, after the Groceries Code Adjudicator Christine Tacon said she had “formed a reasonable suspicion that the retailer may have broken the Groceries Supply Code of Practice.”

The investigation will focus on practices relating to de-listing and the introduction of benchmarking and depot quality control charges over a period from early 2016 to at least summer 2017.

It will consider the extent, scale and impact of practices which may have resulted in suppliers being de-listed with no, or short, fixed notice periods unilaterally imposed by Co-operative Group without due consideration of published GCA de-listing guidance. The focus will be in relation but not limited to decisions taken between summer 2016 and summer 2017 as part of a project called ‘Right Range; Right Store’.

The investigation will also consider the extent, scale and impact of practices which may have resulted in the introduction of charges without reasonable notice to suppliers. This will include but not be limited to the introduction of depot quality control and benchmarking charges to suppliers, especially those with fixed cost contracts.

In addition, the GCA will consider the retailer’s code-related training for its buyers and the culture contributing to the retailer’s approach to code compliance.

Jo Whitfield, chief executive of Co-op Food, said: “We care deeply about our relationships with our suppliers and we are very sorry that in these two areas we have failed to live up to our usual high standards. We are already addressing the issues with the GCA and our suppliers and we hope the investigation will help bring to light any additional cases so that we can put these right as quickly as possible.”

As well as the supplier refunds, the Co-op said it was retaining staff in the operation of the Groceries Supply Code of Practice and writing to 1,500 direct suppliers to seek information on any delisting decisions that they believe may have been taken without appropriate consultation. “A small number of suppliers have raised concerns which we are working through with them.”