Adjudicator given powers to fine retailers

MINISTERS have accepted to calls from MPs and groups campaigning on behalf of farmers and supermarket suppliers to toughen up the Groceries Code Adjudicator (GCA).

Competition Minister Jo Swinson announced today (Tuesday) the adjudicator will now have the powers, from the start, to fine supermarkets who abuse their power in the marketplace.

The GCA Bill is in the final stages of its path through Parliament. The issue of fines dominated the Bill’s second reading in the House of Commons in November as MPs from all parties lined up to demand that the Government adds powers to the GCA to impose financial penalties as soon as it is established.   

Ministers said they were reluctant to go down this route due to the bureaucratic nature of a legal appeals process that would accompany fining powers. They argued ‘naming and shaming’ would be a more effective deterrent and said Ministers would reserve the right to add fining powers once the adjudicator was up and running - if deemednecessary.  

But Farming Minister David Heath promised that the Government would ‘listen’.

On Tuesday Ms Swinson confirmed fines would now be available ‘as a last resort’ if a breach of the Groceries Code uncovered by the supermarket watchdog was considered ‘serious enough’.

She said: “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.

She said in most cases where supermarkets breach the code, penalties would consist of recommendations being issued to change a supermarket’s behaviour or ‘naming and shaming’.

“We expect 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,” she said.

“I am confident that these changes will mean that the adjudicator is able to ensure fair play in the food supply chain and keep the industry growing.”

She said the change was likely to be ‘widely welcomed by suppliers and farmers’.

The legislative process is expected to be completed by early next year. The Adjudicator, who is set to be appointed by the end of this year, will develop its guidance within six months of the Bill coming  into effect, including proposing the maximum amount he or she will be able to fine.

Retailers would have a full right of appeal against any fines imposed.

During the Bill’s Second Reading, Shadow Defra Minister Huw Irranca-Davies said the case outlined by MPs from all parties for having financial penalties from the start was ‘overwhelming, clear, compelling and unarguable’.

He said the Bill was ‘guaranteed’ to fail this shaming was the only option available to the Adjudicator. “We need all the tools in the toolbox from the off… because a reserve power is one that risks not being used,” he said.

The Groceries Code applies to the 10 UK retailers with a turnover in the groceries market in excess of £1bn. The adjudicator will 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
  • Hold to account retailers who break the rules by ‘naming and shaming’ or, if necessary, imposing a fine

   The Bill and accompanying documents can be viewed on the parliament website here.

Readers' comments (2)

  • A very good example of what sustained lobbying by farmers' groups like the NFU can achieve - a lesson in persistence!

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  • It's a good start. However my concern is whether, when a fine is imposed, it will be large enough for to actually affect the retailer? We have to remember that these companies rake in massive sums of money from their customer through promotions and cheap deals, a nominal fine would not actually be much of a punishment and the supermarkets will likely end up paying less in fines than they would decent prices to their producers which would just invite a breach in the regulations.

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