Tech

Amazon Faces UK Probe, 47% Compliance in Grocery Code

Amazon faces potential investigation as supplier compliance score drops to 47%, lowest among 14 UK retailers.

By Mackenzie Crow

7/11, 08:51 EDT
Amazon.com, Inc.
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Key Takeaway

  • Amazon's compliance score with the UK's Groceries Supply Code of Practice fell to 47%, the lowest among 14 retailers, prompting potential regulatory action.
  • The Groceries Code Adjudicator may launch a formal investigation and impose penalties up to 1% of Amazon's UK turnover if improvements are not made.
  • Despite efforts to improve, Amazon remains an outlier in supplier treatment compared to an industry average compliance score of 94%.

Amazon's Supplier Compliance Issues

Amazon.com Inc. is under scrutiny from the UK's grocery regulator, the Groceries Code Adjudicator (GCA), due to concerns over its treatment of suppliers. According to the GCA's 2024 annual survey, fewer than half of Amazon's suppliers believe the company consistently or mostly complies with the Groceries Supply Code of Practice (GSCOP). Amazon's compliance score fell to 47%, a 12 percentage point drop from the previous year, placing it last among the 14 retailers subject to the code. In contrast, Co-op topped the list with a compliance score of 98%.

Mark White, the Groceries Code Adjudicator, stated, "The survey shows clearly that many suppliers do not believe that Amazon is complying with the code. I will not hesitate to launch a formal investigation if appropriate and necessary to ensure Amazon is treating its suppliers fairly and lawfully." The GCA's code mandates that retailers pay suppliers on time, provide compensation for forecasting errors, and adhere to other commitments to ensure fair treatment.

Potential Investigation and Penalties

The GCA has warned Amazon to take "swift and comprehensive action" to comply with the code. The regulator is closely monitoring the changes Amazon is making and their impact to determine if they are sufficient. If Amazon fails to improve its compliance, the GCA may launch a formal investigation. The GCA has the authority to impose financial penalties of up to 1% of a large retailer's UK turnover.

An Amazon spokesperson responded to the survey results, stating, "We are very disappointed by these results and we are committed to improving them." The spokesperson highlighted several improvements made since last year's results, including clearer explanations for cost price increase decisions, minimum periods for de-listing, and a major upgrade for handling invoice disputes. "We will be making further changes, with faster time-frames to resolve more types of financial disputes, as well as strengthened account management support for smaller suppliers," the spokesperson added.

Industry-Wide Compliance

The GCA's survey revealed that overall compliance scores across the 14 retailers, excluding Amazon, averaged 94%, unchanged from 2023. This indicates that while most retailers are adhering to the code, Amazon's performance remains a significant outlier. The GSCOP aims to ensure that the largest grocery retailers in the UK, including Tesco, Sainsbury's, and Marks & Spencer, treat their suppliers fairly. The code restricts firms from making changes to supply contracts at short notice and requires retailers to provide appropriate notice and reasons if they no longer wish to use a supplier.

Amazon has been subject to the GSCOP since 2022. Despite the company's efforts to improve its compliance, the survey results suggest that many suppliers still have concerns about their treatment. The GCA's potential investigation could lead to further scrutiny and possible financial penalties if Amazon fails to address these issues adequately.

Street Views

  • Mark White, Groceries Code Adjudicator (Bearish on Amazon's supplier treatment):

    "The survey shows clearly that many suppliers do not believe that Amazon is complying with the code. I will not hesitate to launch a formal investigation if appropriate and necessary to ensure Amazon is treating its suppliers fairly and lawfully."