UK retailers face fresh investigation over shelf placements

Britain’s biggest retailers could be discriminating against smaller suppliers by indirectly seeking payments for better shelf positioning, the grocery watchdog has said.

The Adjudicator has said she has seen evidence of potentially illicit payments for prime shelf space between large suppliers and Britian’s big retailers (Photo: Wiki)

The Groceries Code Adjudicator has launched a formal consultation with the British grocery sector to assess the scale of the practice, which could be in breach of retail regulations.

The consultation comes off the back of the GCA’s probe into Tesco’s relationship with its suppliers, which she deemed unacceptable.

Christine Tacon, the official watchdog of the UK’s grocery industry, found that Tesco was making unilateral deductions from its suppliers, was taking too long pay money owed to suppliers and in some cases intentionally delaying significant payments for its own benefit.

However, while she found no evidence of Tesco directly asking suppliers for payments to secure better shelf positioning, which is in direct breach of the Groceries Code, she has said she found practices that “could amount to an indirect requirement for payment for better positioning or increased share of shelf space.”

Such practices could be interpreted as “circumventing the Code to the detriment of smaller suppliers” as they are pushed out by large companies who can afford to pay for prime shelf space, she said in a follow-up statement on Monday.

Announcing the probe, Tacon said: “I have decided to launch a formal consultation with the groceries sector to help me reach a firm conclusion on how prevalent these practices are and whether they are consistent with the Code.”

Suppliers and others including smaller retailers could be invited to contribute to the consultation as soon as Easter, with a conclusion potentially around the summer.