LARGE SUPERMARKETS have been told to treat their suppliers fairly, or face fines from the new Groceries Code Adjudicator.
In a change likely to be widely welcomed by suppliers and farmers, the Competition Minister Jo Swinson announced that the Adjudicator will have more teeth to protect suppliers from unfair treatment.
However, the British Retail Consortium (BRC) said the decision flies in the face of common sense and sends the wrong signal to business.
The Adjudicator is being set up through the Groceries Code Adjudicator Bill, which is currently passing through Parliament. Previously the Adjudicator could only name and shame retailers found to have breached the Code. The power to fine was held only in reserve, and there were concerns that it may never have been made available.
Under the changes announced this week, however, if the Adjudicator finds that retailers are breaching the Code and treating their suppliers unlawfully or unfairly, he or she will be able to apply a range of sanctions. In most cases, this would consist of recommendations or naming and shaming but, if the breach is serious enough, the Adjudicator will have an immediate power to fine the retailer.
The Groceries Code Adjudicator will help to ensure that the market is operating in a fair and healthy way, said Swinson. 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. But where supermarkets are breaking the rules with suppliers and treating them unfairly, the Adjudicator will make sure that they are held to account.
Swinson said she expects fines to be used as a last resort, but the fact that the Adjudicator has the power to impose them will send a strong message to retailers that compliance with the Code is not optional.
The NFU welcomed the news. We are delighted that the government has listened to us and will be amending the Bill accordingly, said head of government affairs Nick von Westenholz.
However, the BRC criticised the decision as anti-business. 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. Also, in the 2.5 years it has been operating, not one supplier has needed to go to arbitration to resolve a problem with a supermarket.
"This flies in the face of common sense and is yet another piece of disproportionate legislation aimed at food retailers, he added.