Fines for supermarkets who treat farmers and suppliers badly a step closer

Measures to grant the Groceries Code Adjudicator (GCA) powers to fine UK supermarkets have been laid in Parliament, Liberal Democrat Business Secretary Vince Cable has announced.

The Adjudicator will be able to impose penalties on large retailers of up to one per cent of a companies’ annual UK turnover, dependant on the seriousness of the breach of the Code.  This comes despite Tory opposition to grant the watchdog the powers it needed to do its job.

The Groceries Code Adjudicator was first introduced by local MP Norman Lamb in 2012 in his role as Minister for Consumer Affairs at the Department for Business.

Commenting, Norman Lamb said:

“It was clear to me as Minister that in some circumstances large supermarkets were using their buying power to pass on excessive risk and unexpected costs to suppliers. This could act against the long-term interest of consumers, by discouraging suppliers from investing and innovating in new product lines or production processes.

“I therefore wanted to create an independent adjudicator to look at cases where suppliers felt they had been treated unfairly, to ensure that supermarkets could not abuse their market position.  It is frustrating that the scheme we initially introduced was not enough to ensure that suppliers got a fair deal, but I am glad that my Liberal Democrat colleagues at the Department for Business have continued to press forwards on this agenda, working to introduce strong new powers to fine supermarkets who treat farmers badly.”

The Code imposes on the supermarkets an overarching principle of fair dealing with their direct suppliers, including farmers.

It includes specific provisions governing terms of supply, timing of payments, marketing and promotional costs, and payments as a condition of being a supplier.

The Code does not govern issues relating to pricing.

These new measures will add to existing powers to issue supermarkets with recommendations as to their future conduct, and to ‘name and shame’ those that have breached the Code.

Liberal Democrat Business Secretary Vince Cable said:

“The Groceries Code Adjudicator is a Liberal Democrat idea and was designed to make sure suppliers, such as farmers and small businesses, are given a fair deal by supermarket giants.

“Despite Tory opposition this important final step will give the GCA the power it needs to address the issues in the supply chain, between grocery retailers and their direct suppliers.

“I am pleased today to be giving the Adjudicator the final element in a set of powers that will give this new body all the tools it needs to succeed in this challenging and important role.”

Notes to editors:

The Groceries Code Adjudicator was created in 2013 to enforce the Groceries Supply Code of Practice that, since 2009, has governed the commercial relationships between the UK’s ten largest supermarkets and their direct suppliers of food, drinks, and a range of household products.

These measures are subject to the successful completion of parliamentary process; including passage through the Joint Committee of Statutory Instrument and further debate in both the House of Commons and the House of Lords.

A copy of the statutory instrument can be found at http://www.legislation.gov.uk/uksi

A copy of the GCA guidance on the principles that will be used to calculate the level of any fine can be found at:
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/226053/Consultation_introductory_text.pdf

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