Groceries Code Adjudicator vows to crack down on large supermarkets which abuse their power
Large UK supermarkets which abuse their power in the marketplace and treat suppliers “unfairly” could be fined by a new watchdog under changes announced by the Department for Business.
In a U-turn hailed by campaigners, ministers have bowed to pressure from MPs and groups lobbying on behalf of farmers and other food suppliers to toughen up the new Groceries Code Adjudicator (GCA).
The proposed legislative framework originally specified that the adjudicator should have only the power to “name and shame” any stores which flout the code. The business secretary, Vince Cable, reserved the right to introduce fines at a later date if the system did not work.
But the competition minister, Jo Swinson, announced on Tuesday that the adjudicator would have the power, from the start, to fine supermarkets which abuse their power in the marketplace – for example by forcing down wholesale prices to below cost levels in a move that would penalise suppliers.
Swinson 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.”
The Groceries Code applies to the 10 UK retailers with a turnover in the groceries market in excess of £1bn.
The watchdog will be able to arbitrate disputes between retailers and suppliers, investigate complaints from direct and indirect suppliers, and hold to account – and if necessary fine – retailers who break the rules.
The GCA bill is in the final stages of its passage through parliament, which has been far from an easy ride.
The issue of fines dominated its second reading in the House of Commons in November as MPs from all parties lined up to demand that the government added powers to the GCA to impose financial penalties as soon as it was set up.
The level of fines are still to be agreed, however, and will be determined by Cable in the coming weeks.
Charities welcomed the government’s decision to give the watchdog “teeth”.
Murray Worthy, supermarkets campaigner for the anti-poverty charity War on Want, said: “We welcome the government’s announcement that its supermarket watchdog will have the power to impose fines for bullying suppliers.
“This breakthrough has only come through dedicated campaigning, with members of the public across the country pushing MPs for action to curb supermarkets’ excessive power.
“It is a great step towards securing fair treatment for workers around the world who pick, pack and grow our food.”
Paul Chandler, chief executive of charity Traidcraft, added: “We are delighted that the government has agreed that the supermarket watchdog should have the power to fine.
“It will reassure farmers in developing countries that it is worth protesting if supermarkets make unreasonable demands on them, such as changing the price or the amount ordered at the last minute.”
He said the charity’s campaigners had been “pressing the government for months – and the minister herself praised our supporters for their ‘tireless campaigning’ – even taking our tiny ‘toothless watchdog’ to the House of Commons to illustrate the point.”