Aldi is facing an unprecedented High Court intervention by the Groceries Code Adjudicator (GCA), after it was accused of delisting one of its longest-serving suppliers in a move which it claims led the business to go under.
The Grocer can reveal documents were submitted at the High Court today by Adjudicator Mark White, to intervene in a case taken against the discounter by two farmers, John Clappison and Matthew Rawson, whose W Clappison Ltd (WCL) business ran the last sprout and brassica farm in Yorkshire. It supplied sprouts to supermarkets including Aldi, Morrisons and Iceland for more than 20 years.
WCL claims Aldi terminated its supply agreement in February last year after its crop for the retailer had already been sown, leading to the collapse of the business.
It is suing the retailer for losses of £3.7m, claiming it failed to comply with its obligation to provide “reasonable notice” to the supplier.
GSCOP’s rules on a reasonable notice period state a retailer is required to consider all circumstances, including the duration of supply; the characteristics of the relevant groceries; the value of the order relative to the turnover of the supplier; and the overall impact on the supplier.
A spokesperson for the GCA told The Grocer: “The GCA has applied to intervene in the proceedings to assist the Court in resolving the Groceries Code matters in dispute between the parties.”
WCL claims the retailer is in breach of the rules because Aldi failed to provide it with the written notice ahead of delisting it, and did not tell the company about its legal rights. The discounter is also accused of failing to provide WCL with a “reasonable notice” period.
Aldi’s delayed delisting
According to court papers seen by The Grocer, WCL supplied sprouts to Aldi from 2010 until March last year, with the first three years of the deal involving it supplying via an intermediary, Ibbotsons.
The papers say that Aldi, on numerous occasions, assured WCL it could have confidence in Aldi as a customer and therefore be confident of making investments in its operations.
It claims in June 2022 a business strategy video stated it would “be trusted as a stable and growing partner for our supply base, giving the security and certainty you need to invest in your own organisation”.
The papers say that prior to the beginning of the 2023-24 season, WCL secured land to grow sprouts and make arrangements to acquire seed for planting, with sprouts sown in late January or early February.
But it claims at the end of February Aldi contacted the company to say it had not won any business for the season.
“Aldi did not provide any written reasons for its decision until 7 March 2023,” claim the papers.
“WCL has not received any prior indication that it was likely to be delisted.”
The case for the farmers is being run by GSCOP expert and food and drink lawyer Mark Jones at law firm Gordons.
Read more: Lidl faces landmark £2.6m court case as supplier sues over alleged GSCOP breaches
The High Court case is only the second time GSCOP has been the basis of a hearing in the High Court, and the first time the GCA has been actively involved in proceedings.
In 2022 Lidl was sued for £2.6m by a fruit and vegetable supplier, who claimed it was wrongly cut out of deals by the discount chain in moves which “destroyed its business”.
Proctor & Associates, which once supplied Lidl with up to 57 different kinds of fruit and vegetable, claimed it had to stop trading after the discounter delisted a string of its products without notice and poached Proctor’s suppliers.
Jones also represented the firm in that case, which was settled in a confidential agreement.
An Aldi spokesman said: “We are disappointed by the claims made by W Clappison Ltd as we go to great lengths to follow the relevant codes of best practice for managing supplier relationships.
“This is why we have consistently been ranked as one of the top supermarkets for conducting relationships fairly, in good faith and without duress in the GSCOP annual survey.”
No comments yet