The Groceries Code Adjudicator has published a GSCOP clarification. This is the second clarification issued by the Groceries Code Adjudicator (see our alert on the first clarification).

Certain suppliers claimed that the Co-operative Group had demanded compensation payments from them for loss of profits arising from a service level breach even though there were no agreed service levels in place and no evidence of breach had been provided.

The Groceries Code Adjudicator queried with the Co-op whether there had been a breach of GSCOP - ie the prohibition on making retrospective changes to supply agreements (paragraph 3(1) of GSCOP).

The Co-op investigated and identified it as an isolated request limited to one buyer in one category. The payment request has been withdrawn by the Co-op and the Co-op buyer has been further trained on GSCOP.

This demonstrates the risk a retailer takes when making demands for payment without demonstrating that the service level had been agreed in advance. It suggests GSCOP can potentially have a real impact on retailers and suppliers.

However, it's worth noting the Co-op's statement that: "We do (and will continue to) ask for loss of profit support but only on individual instances where a suppler does not comply with our terms and conditions". The Adjudicator did not comment on this. Where service levels (and remedies/payments payable if not complied with) are put in place up front in advance and agreed between the Retailer and the Supplier, then that might be enforceable.