Trade associations greet GCA bill with relief
Published:  11 May, 2012

Trade associations have welcomed the news that the government has published the long-awaited bill of the Groceries Code Adjudicator, but have said that they will examine the fine print to ensure that the powers are fit-for-purpose as the bill makes its passage through parliament.

The bill, which was announced in the Queen’s speech only two days, is designed to ensure that suppliers are treated fairly and do not suffer from the power of dominant retailers. Government ministers also confirmed that they had responded to concerns from the Select Committee and amended the bill to allow direct and indirect suppliers and trade associations to complain to the adjudicator, with confidential complaints investigated in order to end the ‘climate of fear’.

Food and Drink Federation (FDF) director general Melanie Leech, said: “We need an effective GCA to enforce the Groceries Supply Code of Practice (GSCP) and ensure suppliers have the confidence to come forward directly or through their trade associations.

“The Competition Commission findings were clear that unless the abuse of market power is addressed, then businesses – especially small and medium-sized manufacturers – will be less inclined to innovate and invest. We believe an Adjudicator will help to ensure that the food chain operates fairly and in the best interests of consumers in terms of choice and availability.”

The NFU today said the strong stance taken by the government against intense lobbying from the retailers will bring huge relief to the farmers and growers supplying the large retailers. NFU president Peter Kendall said it was a just reward for the farmers and growers who had bravely stepped forward to reveal unfair practices.

He said: “After years of campaigning, this announcement will be welcomed by suppliers and producers who, for too long, have been subjected to unfair practices by the major supermarkets.

“While some retailers have taken steps to build stronger relationships with suppliers, all too often the pursuit of short-term financial performance leads them to abuse their market power – all too often at the expense of farmers and growers at the end of the line.

“The new adjudicator also has the power to fine retailers without the need for new primary legislation being introduced if other remedies prove insufficient, and this has to be good news for the supply chain as a whole.

“Our main concern now is that the bill becomes law at the earliest opportunity and receives proper but swift scrutiny as it passes through parliament. The GSCP has been in force for over two years – essentially a rulebook without a referee. Now the opportunity has finally come to establish a framework that will encourage investment in the supply chain, improving returns for producers and ultimately benefiting consumers.”

The GCA will have the power to arbitrate disputes between retailers and suppliers, issuing recommendations and holding retailers who break the rules to account by ‘naming and shaming’ them, which the government says is likely to act as a strong deterrent in a competitive market. However, if it is deemed necessary, the Secretary of State can grant the Adjudicator the power to impose fines.

Announcing the bill, 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.”

Agriculture Minister Jim Paice said that the GCA will ensure fair play in the food supply chain. He 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.”

>Queen confirms introduction of Groceries Code Adjudicator

>BRC launches 'last stand' against GCA

>Industry gives evidence on Groceries Code Adjudicator

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