Watchdog: UK’s Co-op Breached Industry Code

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The watchdog of the grocery industry of the United Kingdom has ordered the sixth-biggest supermarket chain in the country, the Co-operative Group, to make major changes to its  IT systems, processes, and governance, after finding that it breached the code of the sector.

Today, Christine Tacon, a Groceries Code Adjudicator, said that the Co-op breached the Groceries Supply Code of Practice by not being able to provide reasonable notice to the suppliers regarding its decisions to de-list products.

The retailer also varied supply agreements unilaterally and without reasonable notice in the way that it is it applied two specific charges.

The watchdog launched an investigation into the Co-op a year ago.

Tacon stated: “The practices and behaviours described in my report were widespread.”

He added: “Systems, processes, business practices and the ability of different parts of the retailer to affect suppliers’ risks and costs of trading with the company all contributed to Co-op breaking the code.”

Tacon said that the Co-op had not acted maliciously and she had decided not to use her powers to impose fines on the company, which can be a maximum of 1 percent of the annual turnover of the company.

However, the Co-op will be required to pay the full cost of the investigation plus the costs for overseeing the implementation of the governance recommendations given by Tacon.

The Co-op said that it has already sent a full apology to its suppliers, refunded approximately 650,000 pounds to those who were wrongly affected by the introduction of the charges, and retrained more than 1,000 employees in order to set a culture of code compliance.

The Food Chief Executive Officer of Co-op, Jo Whitfield, stated: “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.”