Christine Tacon, the GSCOP Adjudicator, has completed her first year in office. What has she achieved so far?
Her biggest success to date is persuading 8 of the 10 “Designated Retailers” (DRs) to change their ways regarding so-called “forensic audits”. In a previous update we highlighted this much-resented practice. The Adjudicator reports that all the DRs (except Sainsbury’s and Waitrose) have in principle agreed to limit their search for missed claims to the current and the last two financial years.
What has been going on at Tesco?
Following the revelation of Tesco’s overstatement of its profits by some £250m, the Adjudicator has requested the appointed investigators to report on its GSCOP compliance. It remains to be seen whether the techniques used by Tesco to boost its reported profits involved breaches of the Code and, if so, what the implications of that might be. (See below for more on this.)
So far so good – but use her or lose her!
The Adjudicator has warned that unless more suppliers are willing to report possible breaches of the Code, it will be difficult to justify the continuation of her office for very long.
Before she was appointed, suppliers’ reluctance to complain about breaches of the Code, for fear of reprisals, was understandable. But one of her earliest moves was to make it clear that she welcomed confidential complaints, and would preserve confidentiality. In her first year-end report* she has again stressed this.
Why won’t suppliers shout up? It may be explained by the tenor of most of the comments offered by people in the trade on the issue of relationships between suppliers and the supermarkets in the light of the Tesco affair. See for example this recent Harpers feature.
It is one thing to be realistic and recognise that because every major supermarket has enormous bargaining power, it will be able to drive a hard bargain. Comments of the “if you can’t stand the heat, get out of the kitchen” variety are perfectly valid when it comes to negotiating commercial deals.
But it is quite another thing, for example, for a supermarket buyer to come along some time after a deal has been struck, and unilaterally change the agreed terms – see Angela Mount’s case of the supplier who says: “I know we did a deal, but I need another £15,000 from you”. Most of the trade commentators fail to recognise this distinction, or to mention that suppliers have a potentially effective, and risk-free, option if they consider that a supermarket may be in breach of the Code.
Hence the Adjudicator’s desire for a Code compliance report on Tesco. If this sort of practice not only breaches the Code, but is also used to distort and deceive, all the more reason to stamp it out. She has a range of powers she can use, but she needs suppliers to give her evidence in order to act. This avenue is open to all suppliers, anywhere in the world, who sell to the DRs. Use her or lose her!
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