The Office of the Grocery Sector Code of Conduct (OGSCC) is aware of recent reporting regarding the introduction of fuel-related surcharges and other cost adjustments by certain suppliers in response to rising transportation and input costs.

In this context, the OGSCC is issuing a reminder to all members that Sections 4.8–4.10 of the Grocery Code of Conduct apply to Supplier Cost Changes, including surcharges or other mechanisms used to address cost pressures. In addition, Section 1 applies to Parties’ dealings more generally.

Key Reminders:

• Fair and ethical dealing (Section 1):

• Parties have an obligation to negotiate in good faith and in the spirit of fair and ethical dealing (Section 1.1).
• Parties may not alter contracts unilaterally (Section 1.3).
• Parties may not undertake or threaten punitive acts for exercising rights under the Code (Section 1.5).

• Freedom to negotiate (Section 4.8):

Parties retain full discretion to negotiate Supplier costs. Either Party may accept or decline proposals related to cost changes, including surcharges.

• Importance of Agreements (Section 4.9):

Parties should clearly set out in their Agreements:

• The notice requirements for cost change proposals,
• The information required to assess such proposals,
• Any cut-off timelines for acceptance or rejection, and
• The effective date(s) of any agreed changes.

Members are encouraged to review their Agreements to ensure clarity on these elements and to adhere to agreed processes.

• Scope of dispute resolution (Section 4.10):

• The magnitude of a Supplier cost increase (i.e., how large the increase is) is not subject to the Dispute Resolution Management Process (DRMP).
• However, where Agreements include procedures governing how cost changes are proposed and implemented (as contemplated under Section 4.9), compliance with those procedures may be subject to dispute resolution, including referral to the DRMP.

Clarification on Code Scope:

The Code does not regulate or assess the appropriateness of the size of cost increases or surcharges. Rather, it focuses on ensuring that:

• Cost changes are handled in a manner consistent with agreed contractual processes, and
• Parties engage in fair, transparent, and good faith dealings in line with the Code’s principles.

OGSCC Expectation:

Members should:

• Ensure that any cost change proposals (including temporary surcharges) are made in accordance with existing Agreements,
• Provide appropriate notice and supporting information, where required, and
• Engage constructively with counterparties in the spirit of the Code.

The OGSCC will continue to monitor developments and may provide further guidance where appropriate, based on information received from industry participants.

For questions or to share information on emerging practices, members may contact the OGSCC at info@canadacode.org or use the Member’s Portal.