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Groceries Code publishes consultation response on product positioning payments

The Groceries Code Adjudicator (GCA) has published its response following a consultation into whether retailers are breaching the Groceries Supply Code of Practice by requiring suppliers to pay to secure better positioning of goods or increased shelf space within a store.

It sought feedback from retailers, a range of suppliers, trade bodies and other interested parties.

The GCA has concluded that retailer practices in this area have improved and that there is no need for interpretative guidance or other regulatory intervention.

Whilst it is clearly good news for the regulated retailers, there is evidence that:

  • Larger suppliers remain willing to 'invest' in their relationship with the retailers.
  • Some suppliers voluntarily make payments to retailers with the expectancy that this will lead to better product placement following wider commercial negotiations.
  • Suppliers are involved in category management and product range reviews and provide data, advice and personnel to assist the retailer with product decisions. 

The GCA notes that smaller suppliers may be disadvantaged by the above practices because they are not in a position to offer similar investment to retailers.

The GCA’s response makes it clear that discussions about ‘investment’ and offers of payments by suppliers should demonstrably be freely held as part of normal commercial negotiations if regulated retailers are to avoid falling foul of the Code in the future.

The GCA’s response also includes a clear message that those retailers would benefit from having clear policies governing supplier participation in range reviews and the engagement of suppliers on category captaincy or category management (including consideration of whether other suppliers are able to contribute to or challenge the category advice received from the appointed category captain or category manager). Those involved in such practices would therefore be well advised to review their current procedures and, where applicable, seek to implement new polices as soon as possible.

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at February 2017. Specific advice should be sought for specific cases. For more information see our terms & conditions

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