Retailers Ocado and B&M are now bound by rules on treating suppliers fairly because their annual groceries turnover now exceed £1bn.
The Competition and Markets Authority (CMA) has announced the strict industry rules will now apply to online supermarket Ocado and discount retailer B&M.
The Groceries Supply Code of Practice sets out how such grocery retailers should treat their suppliers and aims to make sure that they do not abuse their commercial power.
For example, retailers bound by the Code cannot make changes to the terms of supply retrospectively and must provide notice of and reasons for no longer using a supplier.
Compliance with the Code is managed by the independent Groceries Code Adjudicator (GCA).
The CMA regularly monitors UK retailers to see if they meet the criteria to be subject to the Code, as it only applies to those companies with an annual groceries turnover of more than £1bn.
Treated unfairly
The Code was created in 2009 following an investigation by the Competition and Market Authority’s (CMA) predecessor, the Competition Commission (CC).
The CC investigated the supply of groceries in the UK and found that some suppliers of larger retailers were being treated unfairly.
This meant suppliers were less likely to innovate and invest, leading to less choice and availability for customers.
Peter Hill, Head of Remedies Enforcement at the CMA, said: “These rules mean that suppliers are protected from unfair business practices, and retailers can trade with confidence on a level playing field. Businesses supplying Ocado and B&M will now also benefit from this protection.”
Other retailers subject to the Code are Asda, Co-op, Marks & Spencer, Morrisons, Sainsbury's, Tesco, Waitrose, Aldi, Iceland and Lidl.
