The role of the Code Compliance Officer…

1. Steven ButtsHead of Corporate Responsibility & GSCOP Code Compliance OfficerGroceries Code Adjudicator – UK Conference

2. The role of the Code Compliance Officer… • Wm Morrison Supermarkets PLC • Key stakeholders in food retail • Code Compliance Officer’s role and duties • Working with the Groceries Code Adjudicator • Some thoughts…

3. Wm Morrison Supermarkets PLC

4. Stakeholder interests - ‘responsible business’ Fair dealing means we are a valued customer with positive and flexible relationships& can support resource efficient supply chains Drives footfall, loyalty and attracts new customers Improves financial performance, a more successful business –which mitigates risk More effective engagement and a trusted thought leader Supermarket of choice with stronger links into local issues, better recruitment and footfall Opportunity for enhanced reputation through engagement and partnerships Attract and retain the best talent offering a better customer experience

5. The Groceries Code framework… GSCOP came into force in 2010 The ‘Order’ requires retailers to establish and maintain the role of a ‘Code Compliance Officer’ The Adjudicator was appointed in 2013 with power to: impose a levy to fund the GCA’s office regulate the operation of the ‘Code’ request information & documentation launch investigations arbitrate disputes require remedial action name and shame impose significant fines recover investigation costs publish guidance

6. 1. Code Compliance Officer … a point of contact • The Order - PART 4, Article 9 • A Designated Retailer must appoint a suitably qualified employee as the Code Compliance Officer…… • ..[and] must ensure that the Code Compliance Officer will be: • … provided with resources and access to information & the Buying Team; • … a point of contact for Suppliers and any authority; • … independent and not managed by any member of the Buying Team and • … available to discuss with Suppliers any decisions made by the Designated Retailer. • Head of Corporate Responsibility, legally qualified, reporting into the Management Board & Main Board. • … based at head office, with open access to all parts of the business, working closely with Group Legal • … details at morrisons.co.uk/cr(alongside our GSCOP ‘Senior Buyers’) • … part of the Corporate Services Division • … part of our escalation process

7. 2. Code Compliance Officer… regulatory reporting • The Order - PART 4, Article 10 • A Designated Retailer must ensure that, for each complete financial year, the Code Compliance Officer delivers an annual compliance report to the OFT [Competition & Markets Authority], copied to the Ombudsman [Groceries Code Adjudicator • ..[and] the compliance report must : • … be approved by the Designated Retailer’s audit committee; • … record details of alleged or actual breaches and steps taken to rectify any formal ‘Disputes’ (i.e. escalated matters up to Arbitration); and • … detail other steps taken during the year to ensure compliance e.g. training • … three reports now submitted since 2010 • … approved by our Main Board in the form of our Corporate Compliance & Responsibility Committee • … covers recorded allegations and activity across trading and any formal ‘Disputes’ in a format stipulated (originally) by the OFT • … reports on training and any other related matters

8. 3. Code Compliance Officer… business reporting • The Order - PART 4, Article 10 … cont’d. • … A Designated Retailer must ensure that the Code Compliance Officer provides such other reports as are necessary…. for effective oversight [to the audit committee, relevant non executive director, Chief Executive or Managing Director]; and • … a summary of the compliance report must be included in the Designated Retailer’s Annual Company Report • … regular (monthly) reports to the Management Board and routine communication with Corporate Services Director & General Legal Counsel & relevant Management Board Members • … included in last 2 Company Annual Reports

9. 4. Code Compliance Officer… training • The Order - PART 4, Article 8 • A Designated Retailer must provide training (and re-training) on the requirements of the Order & the Code… each calendar year… • … 4th year– formal training, guidance materials and on-line testing • … new buyers trained within one month of arrival and this is tracked through our learning management system • … this year we’ve developed a new ‘Know your Responsibilities’ module with blended training: • formal group session for all of the buying team and linked business units • mixed with other focus areas such as key trading policies and pricing rules • … this is backed up by additional online testing, an intranet site and team training or presentations delivered by the CCO or legal team

10. 5. Code Compliance Officer… dispute management? • The Order - PART 5, Article 11 • Art. 11(1)ADesignated Retailer must negotiate in good faith with a Supplier to resolve any dispute arising under the Code. • Art. 11(2)A ‘Dispute’ will arise under the Code when....a Supplier wishes to initiate the dispute resolution procedure set out in Article 11 after informing the Code Compliance Officer that it believes there has been a breach of the Code • There follows a 21 day period after a Dispute is formally notified for the parties to try and agree - but if not, then within the next four months the Supplier could elect to go to formal Arbitration (processes set out in the Arbitration Act 1996) • … Most enquiries are informal and start with the Buyer – can be escalated to a GSCOP Senior Buyer (Category Director) and are usually dealt with within the Buying Team • … the Buying function may seek advice from Group Legal, or the Code Compliance Officer at any time • … matters that can’t be resolved may then escalate to a ‘Dispute’.

11. Working with the Groceries Code Adjudicator • Business as usual • Regular informal engagement as CCO • Quarterly diary meetings with the GCA & Officials from the GCA’s team • Senior level engagement • Introductory meetings with our Chief Executive and Management Board members • Visit to Head Office • GCA undertook a briefing session with our GSCOP Senior Buyers • The Order & the Code in operation • Formal annual reporting • Responding to a formal enquiry from the GCA on our multi-channel programme • Discussing structural issues in advance

12. Views on the regulatory framework… • GSCOP - The context… • Unusual application of regulation in business to business relationships • Implies ‘supra-contractual rights’ into trading terms – we are establishing ‘new case law’ without a judicial framework • It affirms the perception of the dominant retailer – but the market is not that straightforward – wider stakeholder interest and many key suppliers are large global entities – the Code only works one way… • Application only to a limited number of food retailers • Requires careful framework management to avoid unanticipated regulatory extension • Some thoughts… • Continue to foster greater understanding of the Code and its application • More detailed guidance is helpful – uncertainty is not good for business or customers • Encourage suppliers to talk to retailers first - solutions orientated approach • Appraisal of the role of the Code Compliance Officer – a broad corporate overview and specialist facilitator • Support for a pragmatic and positive approach based on driving or enhancing supply chain efficiency