Do We Really Understand the Laws That Govern UK Grocery Retail?
Navigating the legal landscape of UK grocery retail can be daunting, especially for suppliers trying to stay compliant while managing tough negotiations. From misunderstandings of GSCOP to the serious implications of Competition Law breaches, the stakes are high and the knowledge gaps are worrying. In this article, Darren shares real-life anecdotes from the field, highlights common pitfalls and reveals what worries him about the statistics on Competition & GSCOP Law.
Here’s Darren’s Take on Competition & GSCOP Law:
In my travels training suppliers, I see and hear some horror stories, and I thought I’d share a few. Plus, offer some useful facts about this most necessary of evils – the law and how it pertains to UK grocery.
A National Account Manager was speaking with a top 4 supermarket buyer, and he recounted this sentence to me from the buyer, ‘If you keep doing that, I’ll have to report you to the GCA’. By GSCOP law, buyers are trained every year in GSCOP law. Clearly, he/she was off that day ill. It is worrying.
‘GSCOP will help me get the CPI’s through’. Another NAM but this one is in sheer desperation, hoping that GSCOP would sort the negotiation problem. It won’t. It can’t. This is why negotiation skills, conflict management and persuasion are such critical skills for a NAM. Only a third of NAMs get on-going training in this soft skill. Many just receive it once in their career. No wonder many come back from buyer meetings broken.
A ranting NAM, “What the hell does ‘reasonable notice’ mean in GSCOP?”. An excellent question. The problem is that it is the law. Defined where it is and grey for all the rest of the wording. The best you can do is to put forward a compelling case. Even better, have had a written supply agreement in place. Only 47% of suppliers have one and it is the one piece of defence that will really help you in disputes. Argue, negotiate, persuade, and fight to get your written supply agreement.
GSCOP
- Suppliers ARE bound by Competition Law and are NOT bound by GSCOP Law.
- Only 14 retailers, and they are named in the law, are bound by GSCOP law. The latest was Amazon, who were added in 2022.
- 16% of suppliers are still unaware of GSCOP. There is no excuse.
- A Retailer can be fined up to 1% of their UK turnover. That is £572 million for Tesco.
- The biggest issues suppliers report is getting invoices resolved quickly.
Competition Law
- The fine for breaching Competition Law is 10% of Global Sales. That is £6.53 billion for Tesco.
- According to a CMA study, only c25% of businesses demonstrated a good understanding of Competition Law. That’s 75% who don’t have a good understanding. Another worry.
- In 2023 the CMA handed out fines of £64m for breaches, with Asda receiving a fine of £60,000.
- Suppliers can set a maximum price for their products. Yes, this is allowed (There are caveats to be aware of).
- Informal conversations are illegal if they restrict competition. Beware!
You’d expect an Independent Financial Advisor to know the FCA’s rules. We’re no different.
This article was written by Darren A. Smith for The Grocer. Read the original published article here.
