In early August, the Competition Commission (CC) announced that it has adopted the new Groceries Supply Code of Practice (the Code). The Code replaces the much maligned Supermarkets Code of Practice and this comes after the CC’s inquiry into the alleged use by some supermarkets of their buying power to transfer excessive risks and unexpected costs to their suppliers.

The Code applies to retailers who have a turnover of over £1billion attributable to the retail supply of “groceries” which includes food and drink, cleaning products, toiletries and household goods. Retailers caught by the Code will include amongst others ASDA, Marks & Spencer, WM Morrison, Sainsbury’s, Somerfield, Tesco and Waitrose.

The Code contains a fundamental requirement that an overarching fair dealing provision must be included in every contract between retailers who are subject to the Code and their suppliers. The Code also covers a number of issues including prohibiting retailers from making retrospective adjustments to terms and conditions of supply and holding suppliers liable for shrinkage losses.

Compliance with the Code will be supervised and enforced by the Groceries Supply Code of Practice Ombudsman, which will be a newly created role.