The UK's new grocery industry watchdog will have the power to fine supermarkets who deal "unfairly" with suppliers, the country's government announced today (4 December).
The Grocery Code Adjudicator is being established following a 2008 investigation that identified competition issues in the grocery supply chain. It will enforce the Grocery Code of Practice and act as an arbitrator in disputes between supermarkets and their suppliers.
The Department for Business, Innovation and Skills (BIS) said the government had "listened to concerns from stakeholders" and decided to give the Adjudicator "more teeth to protect suppliers from unfair treatment".
Large supermarkets who are found to breach the Groceries Code will face a range of sanctions, from recommendations and "naming and shaming" to fines for serious breaches. The upper level of fine is yet to be set and the Adjudicator will propose a maximum fine "within six months" of the bill coming into effect.
"The Groceries Code Adjudicator will help to ensure that the market is operating in a fair and healthy way. Large supermarkets form a big chunk of this industry, and generally provide consumers with low prices and variety whilst providing business for farmers and suppliers," competition minister Jo Swinson said.
However, Swinson added: "Where supermarkets are breaking the rules with suppliers and treating them unfairly, the Adjudicator will make sure that they are held to account. We have heard the views of the stakeholders who were keen to give the Adjudicator a power to fine, and recognise that this change would give the Adjudicator more teeth to enforce the Groceries Code."
Swinson said fines would be used as a "last resort" but added the move sends a "strong message to retailers" that compliance with the Groceries Code "is not optional".
Responding to today's announcement, the British Retail Consortium criticised the government's stance and warned that the "heavy-handed" power to impose fines "does not suggest the UK is the best place to do business".
"This flies in the face of common sense and is yet another piece of disproportionate legislation aimed at food retailers," British Retail Consortium Director General Stephen Robertson said. ""We've long maintained that the power to impose fines is unnecessary and heavy-handed and should be kept in reserve. The Code already has a provision for 'naming and shaming' retailers - that's a significant sanction."
Retailers will have the "full right of appeal" against fines, BIS said. However, Robertson insisted that retailers should also have the ability to appeal against being named and shamed.
The move has, however, been welcomed by supplier groups. The Forum of Private Business, which represents small businesses, said that the news was an "early Christmas present" for "thousands" of suppliers.
"We have always supported the concept of the Groceries Code Adjudicator, but said it would be seriously undermined without the power to fine, a tool without which would have rendered a body like this unfit for purpose from the outset," the Forum's head of policy, Alex Jackman, said.
"Supermarkets understand one thing, and one thing only, and that's money... The Adjudicator now has the means and the purpose to do its job properly - and that's to be the guardian and friend of poorly treated suppliers."
