By Daniel Hunter
Plans to set up the new Groceries Code Adjudicator moved a step closer this week as the Bill was published in the House of Lords.
The new body is being established to enforce the Groceries Code after the Competition Commission identified competition issues in their 2008 market study. In particular it concluded that the market dominance of big supermarkets led to some suppliers being treated unfairly in the UK and overseas.
Establishing an Adjudicator would beef up protection for farmers and suppliers in ensuring that large retailers treat them fairly by lawfully adhering to the Groceries Code. In particular the Adjudicator would be able to:
- arbitrate disputes between retailers and suppliers
- investigate confidential complaints from direct and indirect suppliers, - whether in the UK or overseas, and from third parties, to end the ‘climate of fear’
- hold to account retailers who break the rules by ‘naming and shaming’ or, if Ministers agree it is necessary, fining supermarkets.
“The large supermarkets have a lot of buyer power, and with power come responsibilities," Business Minister Norman Lamb said.
"Supermarkets will still be able to secure the best deals and to pass the benefits on to consumers, but they should also treat farmers and suppliers fairly and lawfully. This means paying them on time or not being able to scrap arrangements with farmers and suppliers at the drop of a hat.
“Free and fair competition is the key to a healthy market and by preventing retailers from transferring excessive risk to their suppliers we will support investment and innovation in the supply chain. In the long-term, that’s in the best interests of everyone, especially the consumer.
“I have also responded to concerns from the Select Committee and others that trade associations should be able to complain to the Adjudicator and have amended the draft Bill to provide for this.”
If a retailer is found to have breached the Groceries Code then the Adjudicator would have wide ranging powers to effect remedies such as:
· issuing recommendations to solve the dispute;
· naming and shaming the offenders by publishing information or
· imposing fines (if the Secretary of State considers that the other solutions aren’t working and grants the Adjudicator this power)
In such a highly competitive market, these remedies, in particular the ability to ‘name and shame’ supermarkets, is likely to have a strong deterrent effect.
“The Grocery Code Adjudicator will ensure fair play in the food supply chain to make all terms fair and balanced," Agriculture Minister Jim Paice said.
“The food industry is vital to our economy and this Government is committed to ensuring that all sectors of it are able to thrive while providing the best value and quality for consumers.”
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