Britain's grocery regulator has warned Amazon (NASDAQ:AMZN) that it could face a formal investigation unless it enhances its adherence to a code designed to protect suppliers.
The Groceries Code Adjudicator (GCA) highlighted in its 2024 annual survey that less than half of Amazon's direct suppliers believe the company consistently follows the Groceries Supply Code of Practice (GSCOP).
GSCOP mandates fair treatment of suppliers by the UK's 14 largest grocery retailers, which include Tesco, Sainsbury's, and Marks & Spencer. Amazon has been subject to this code since 2022.
The code specifically prohibits abrupt changes to supply contracts and requires retailers to provide adequate notice and reasons before ending a supplier contract.
According to the survey, Amazon's compliance rating dropped to 47% from 59% in 2023, placing it last—41 percentage points behind Iceland, which ranked 13th at 88%.
An Amazon spokesperson expressed disappointment with these results and affirmed a commitment to improvement.
Mark White, the Groceries Code Adjudicator, emphasized the need for Amazon to take "swift and comprehensive action" to meet the code's standards, stating his readiness to initiate a formal investigation if necessary to ensure fair and lawful treatment of suppliers.
The GCA has the authority to impose fines up to 1% of a retailer's UK turnover for non-compliance.
The Amazon spokesperson also noted that since the last survey, the company has implemented improvements for grocery suppliers, including clearer rationales for price increases, established minimum periods for de-listing, and a significant upgrade in handling invoice disputes.