Government u-turn on Groceries Code Adjudicator

The government has done a u-turn on its decision not to allow the Grocery Code Adjudicator (GCA) to impose fines on retailers who deal with suppliers unfairly.

The Department for Business, Innovation and Skills announced yesterday (4 December) that it was strengthening the GCA by giving it additional powers to fine retailers, despite branding these as “unecessarily adverisarial” only two weeks ago.

Competition minister Jo Swinson, who presented the bill’s second reading in the House of Commmons on 19 November, had argued that the proposed “proportionate and effective solution” would be “robust and sufficient”. However, today she announced additional sanctions to ensure that the Adjudicator would hold supermarkets to account where they are breaking the rules and treating suppliers unfairly.

She said: “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.
“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. 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.”

Once the bill has come into affect, the Adjudicator will have six months to publish guidance proposing the maximum amount he or she will be able to fine, which will then be approved by the Secretary of State. The retailers will have a right of appeal against fines imposed.

The Groceries Code was put in place by the Competition Commission in 2008 and obliges large retailers to deal fairly and lawfully with their suppliers, including paying suppliers within a reasonable timeframe and not varying supply agreements retrospectively. The adjudicator will be able to arbitrate disputes between retailers and suppliers, investigate confidential complaints from direct and indirect suppliers, and hold retailers who break the rules to account by a process of ‘naming and shaming’ them, or imposing a fine where necessary.

The National Farmers Union (NFU) has welcomed the news. NFU head of government affairs Nick von Westenholz said: “We have campaigned long and hard to ensure the Adjudicator has the necessary teeth to ensure retailers are complying with the Groceries Code of Practice.
“Today’s announcement by the minister shows the government is committed to putting in place a workable system too. Previously the Adjudicator could, at best, only name and shame retailers found to have breached the code. The power to fine was held only in reserve, and may never have been made available. Now we know that, in cases of a serious breach, the Adjudicator can resort to a serious penalty. We are delighted that the government has listened to us and will be amending the Bill accordingly.
“We know from our members that they continue to suffer from unfair treatment by some retailers – so the news that we are now in sight of having an Adjudicator up and running, and with the right powers to do their job, hasn’t come a moment too soon.
“It will be critical now that we work with the Adjudicator, who we hope will be appointed shortly, to ensure the guidance they publish setting out how they will operate is fit for purpose too.”

However, the British Retail Consortium has argued that the changes are disproportionate, heavy-handed and send the wrong signals to retailers.

BRC director general Stephen Robertson said: “We’ve long maintained that the power to impose fines is unnecessary and heavy-handed and should be kept in reserve. The Code already has a provision for ‘naming and shaming’ retailers – that’s a significant sanction and a much fairer system which would deliver better for suppliers, retailers and consumers. Also, in the two and a half years it has been operating, not one supplier has needed to go to arbitration to resolve a problem with a supermarket.

“This flies in the face of common sense and is yet another piece of disproportionate legislation aimed at food retailers. It’s a major let-down and makes it even more important that retailers are given a full right of appeal against being fined or ‘named and shamed’.”

Related News:

>Politicians debate Groceries Code Adjudicator

>Queen confirms introduction of Groceries Code Adjudicator

>BRC launches last stand against GCA

>Industry gives evidence on Groceries Code Adjudicator

>BIS calls for GCA to have greater teeth


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