Supermarkets face penalties for breaking supplier code

26 May 2011

26 May 2011 | Lindsay Clark

Supermarkets could be fined for breaches of a code of conduct governing dealings with suppliers, under proposals published by the government.

The Groceries Code Adjudicator Bill published this week sets out plans to establish a watchdog that will be able to investigate breaches of the Groceries Supply Code of Practice, which was introduced last year. Where it finds against a retailer, it will be able to make recommendations to it, require it to publish information about the investigation or impose a financial penalty on the retailer. However, supplementary legislation on top of the Bill will be required to give the adjudicator the power to enforce fines.

Consumer minister Edward Davey said in a statement: “Preventing unfair practices and increasing certainty for suppliers will safeguard consumer interests, as large retailers won’t be able to take advantage of their position of power, as set out in the Code.

“This is an important step towards establishing the Groceries Code Adjudicator, which the Government is strongly committed to.”

Agriculture and food minister Jim Paice added: “This Bill will give teeth to the Code of Practice, will mean that bad practice can be stamped out and that suppliers can raise legitimate disputes confidentially, and without the fear that they’ll be penalised for speaking up, through lost business.”

However, the British Retail Consortium said the government's decision to proceed with legislation to create an adjudicator would increase costs for consumers, but achieve nothing new.

"Food prices are already under considerable pressure from rising global commodity costs and climbing fuel and utility prices. Retailers are doing their best to cushion customers from the full impact of these increases,” said food director Andrew Opie. “The extra costs of dealing with a new administrative body will make it even harder to keep price rises away from shop shelves.”

Parliament has been invited to begin pre-legislative scrutiny of the Groceries Code Adjudicator Bill.

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