The Co-op has been forced to pay £1.3m in costs and apologise to its suppliers after the Groceries Code Adjudicator (GCA) found it had made breaches in relation to delisting and variation of supply arrangements.
The GCA today said the Co-op had made two breaches of the Groceries Supply Code of Practice. Along with making a number of recommendations for its future conduct, the watchdog also ordered the Co-op to pay back the £1.3m cost of the investigation.
The report said the Co-op “delisted suppliers with no notice or short, fixed notice period that were not reasonable in the circumstances” and applied standard notice periods “contrary to the code and guidance which specify that notice of delisting should be considered on a case-by-case basis”.
It also identified “weaknesses in training, policies and processes for buyers” and “poor functioning of existing IT systems”.
In response, Co-op food boss Jo Whitfield wrote to all of its suppliers to apologise and detailed the grocer’s next steps. Along with working with affected parties and cooperating with the investigation, Whitefield said the Co-op has refunded £650,000 to suppliers.
Whitefield also said the Co-op has carried out “major changes to its governance processes” and work to improve its systems.
As a result, the retailer has “created a new, simpler charging process”; introduced new policies and processes; launched a dedicated helpline for supplied; and trained suppliers on Co-op systems.
She added: “We are sorry. We’ve gone to great lengths to put these things right and have undertaken a root and branch review of all our supplier dealings.
“We were focused on rescuing the Co-op and doing right by consumers, but we should have also given more thought to the potential impact those planned changes would have on our suppliers.
“It is clear we tried to move more quickly than our systems, processes and people could handle.”
The GCA launched its investigation on March 8, 2018 following an “18-month period of significant engagement with the Co-op” in which time the grocer admitted it was “unable to get to the bottom of issues and could not demonstrate that it had taken remedial action in all the relevant circumstances.”
The regulator found no evidence the Co-op had been acting in in a “malicious” manner or had sought to gain from the breaches.