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GCA publishes report on payments for better positioning

7 February 2017

The Groceries Code Adjudicator has published her report following the consultation on payments for better positioning.

The full report, which summarises current market practices and sets out the conclusions made by the GCA, is available here.

The GCA comments: “The responses I received indicate that there has been a change in the approach of the regulated retailers in the period since my appointment in 2013 to bring practices into line with the requirements of paragraph 12 of the Code. This is consistent with the general improvement in compliance with the Code reported in my annual survey and reinforces the benefits of my collaborative approach.”

The key conclusions of the report are:

Indirect requirements by retailers either when a retailer request5s or a supplier offers money for better positioning or as part of a wider commercial negotiation:

The Code does not permit direct or indirect requirements from retailers to suppliers for payments for better positioning or increased shelf space unless in relation to a promotion.

It is the GCA’s view that any retailer demand for payment to be made other than in accordance with the Supply Agreement that results in a supplier negotiating a better positioning in return is not part of normal commercial negotiations and might amount to an indirect requirement contrary to paragraph 12 of the Code.

Discussions about ‘investment’ and offers of payments made by suppliers to retails that might come together with a discussion about better positioning or increased space should demonstrably be freely held as part of normal commercial negotiations, if they are to comply with paragraph 12 of the Code.

Payments for category captaincy and category management:

The GCA considers that any direct or indirect requirement from retailers to suppliers to make any payment to participate in category captaincy or category management and which results in the supplier receiving better positioning or increased space, is likely to be a breach of paragraph 12 of the Code.

The GCA has noted the responses from suppliers who provide category advice that they do this to help grow the category as a whole and to improve the overall offer to consumers. The GCA supports this as the principal aim of category advice provided by suppliers.

The GCA has noted that some retailers have clear policies on how they manage supplier involvement in category advice, including how they make sure that suppliers involved in this activity act objectively. Not all retailers mentioned whether they had such policies. It might be prudent for regulated retailers who engage with suppliers on category captaincy or category management to have a policy setting out how they manage suppler involvement. This might include consideration of whether other suppliers are able to contribute to or challenge the category advice received from the appointed category captain or category manager.

Payments to participate in range review:

The GCA considers that any direct or indirect requirement from retailers to suppliers to make any payment to participate in a range review and which results in the supplier receiving better positioning or increased space, is likely to be a breach of paragraph 12 of the Code.

While several retailers indicted that they had policies setting out how they managed category advice from suppliers, none expressly indicated that it had any policy in relation to supplier participation in range reviews. This might be something for retailers to consider in future.

 

For more information and updates from the GCA see the latest newsletter.

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