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Britain's Co-op breached industry code, says watchdog

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Britain's Co-op breached industry code, says watchdog
FILE PHOTO: Co-op signs outside one of the company's supermarkets in London, Britain, September 14, 2018. REUTERS/Hannah McKay/File Photo   -   Copyright  Hannah Mckay(Reuters)
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LONDON (Reuters) – Britain’s grocery industry watchdog has ordered the Co-operative Group, the country’s sixth-biggest supermarket chain, to make major changes to its governance, IT systems and processes after finding it breached the sector’s code.

Groceries Code Adjudicator Christine Tacon on Monday said the Co-op breached the Groceries Supply Code of Practice by failing to provide reasonable notice to suppliers of decisions to de-list products.

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

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

“The practices and behaviours described in my report were widespread,” said Tacon.

“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 the Co-op had not acted maliciously and she had decided not to use her powers to impose fines, which can be up to 1 percent of the company’s annual turnover.

However, the Co-op will have to pay the full cost of the investigation plus costs for overseeing implementation of Tacon’s governance recommendations.

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

“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,” said Jo Whitfield, the Co-op’s food CEO.

(Reporting by James Davey; Editing by David Goodman)

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