The government is consulting on whether to abolish the Groceries Code Adjudicator (GCA). This is part of a review of its performance under the Groceries Code Adjudicator Act 2013. The Act requires the government to review periodically the performance of the GCA.
The Code was introduced in 2009. It is designed to help control practices by designated larger grocery suppliers (with a turnover of more than £1 billion a year) which transfer excessive risks and unexpected costs to suppliers which in turn can have an adverse effect on suppliers’ willingness to invest in quality and innovation – leading to potential consumer detriment. The obligations include:
- To deal with suppliers lawfully and fairly.
- Not to make retrospective changes to supply agreements unless the ability to make those variations is included as part of the trading arrangement from the outset.
- To pay for goods in accordance with the supply agreement and in any event within a reasonable time.
- To refrain from obliging suppliers to contribute to "shrinkage" costs (that is, costs relating to losses of goods after they have been delivered to the retailer).
- Not to delist (that is, cease to purchase or significantly reduce purchases of) products except for genuine commercial reasons and in accordance with a defined procedure, and having given reasonable notice to the supplier.
The GCA monitors and enforces the Code and can levy fines for breaches.
A key point in the government's consultation is that the Act allows transfers of some or all of the GCA’s functions. When deciding whether to transfer the GCA’s functions, the government must consider the desirability of increasing efficiency, effectiveness, and economy in the exercise of public functions, and of ensuring appropriate accountability to ministers in the exercise of public functions. In addition, the Act allows the Secretary of State to abolish the GCA if they are satisfied that: (i) the GCA has not been sufficiently effective in enforcing the Code to justify its continued existence; (ii) it is no longer necessary for there to be a GCA to enforce the Code.
The GCA was originally planned to be based within the Office of Fair Trading, but at the time, it was not practical to increase the OFT’s functions ahead of its merger with the Competition Commission into the CMA. As a result, the government is now seeking views on whether the functions of the GCA should be transferred (probably to the CMA) or abolished. In 2016, the government reconsidered the role of the GCA, but decided at that time that the GCA was effective in enforcing the Code. However, it is now revisiting the issue.
This is proving controversial and has led to concerns to be expressed by various bodies, including by the British Brands Group. In a tweet on 26 July, the BBG said “Brand owners should be deeply concerned by any suggestion that the #GCA role be disbanded as this brings a single-minded, effective focus on Code compliance”.
How the Groceries Code is regulated in future is an important issue, and consequently, organisations affected by the Groceries Code are advised to respond to the consultation.
The consultation ends on 11 October 2022.
The Government has not made any decisions about a possible transfer but would be particularly interested in whether there might be gains in efficiency and effectiveness in transferring the GCA functions to the CMA