The UK supermarket regulator has launched an investigation into the Manchester-based Co-op Group over its treatment of suppliers.
The Co-op said it had “fallen short” and that 110 suppliers have already been refunded a total of £500,000.
Groceries Code Adjudicator (GCA) chief Christine Tacon launched the investigation “having formed a reasonable suspicion that the retailer may have broken the Groceries Supply Code of Practice.”
The GCA said: “The Groceries Code Adjudicator holds a reasonable suspicion that the retailer may have broken the code through some of its practices.
“These relate to de-listing and the introduction of benchmarking and depot quality control charges over a period from early 2016 to at least summer 2017 …
“In particular, the investigation will consider the extent, scale and impact of practices which may have resulted in suppliers being de-listed with no, or short, fixed notice periods unilaterally imposed by Co-operative Group Limited without due consideration of published GCA de-listing guidance …
“The investigation will also consider the extent, scale and impact of practices which may have resulted in the introduction of charges without reasonable notice to suppliers.
“This will include but not be limited to the introduction of depot quality control and benchmarking charges to suppliers, especially those with fixed cost contracts.”
Tacon said: “I have previously escalated my concerns with the Co-op as part of my published collaborative approach.
“However, after carefully considering all the information submitted to me, I have decided that an investigation is necessary so I can fully understand the extent to which the code may have been broken and the root causes of the issues that have been raised with me.
“It is now important that suppliers provide me with information to help my investigation.
“I am looking forward to hearing what they have to say about whether they have experienced any of the issues now being investigated and if so, the impact on them of the Co-op’s conduct.
“All information I receive will be treated with complete confidentiality.”
In a statement, the Co-op Group said: “The Co-op notes the announcement made today by the Groceries Code Adjudicator (GCA) about some of our practices relating to delisting and the introduction of benchmarking and depot quality control charges.
“We acknowledge that we have fallen short and have been discussing the two issues raised with the GCA for some months.
“We have already taken decisive steps in line with our commitment to ensure the fair treatment of all of our suppliers.”
Jo Whitfield, CEO of Co-op Food, said: “We care deeply about our relationships with our suppliers and we are very sorry that in these two areas we have failed to live up to our usual high standards.
“We are already addressing the issues with the GCA and our suppliers and we hope the investigation will help bring to light any additional cases so that we can put these right as quickly as possible.”