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May 18, 2012

Supermarket suppliers to get better protection against unfair treatment

A new body — the Groceries Code Adjudicator  — is a step nearer to being established as the Groceries Code bill is published in the House of Lords.

The Competition Commission identified a need for an Adjudicator in a 2008 study. It concluded that the market dominance of big supermarkets led to some suppliers being treated unfairly.

An Adjudicator would beef up protection for farmers and suppliers in ensuring that large retailers treat them fairly by lawfully adhering to the Groceries Code. In particular, the Adjudicator would be able to:

  • Arbitrate disputes between retailers and suppliers;
  • Investigate confidential complaints from suppliers and from third parties, to end the “climate of fear”;
  • Hold to account retailers who break the rules by naming and shaming or, if Ministers agree, by fining supermarkets.

Business Minister Norman Lamb said: “The large supermarkets have a lot of buyer power, and with power come responsibilities. 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.”

Agriculture Minister Jim Paice said: “The Grocery Code Adjudicator will ensure fair play in the food supply chain to make all terms fair and balanced. 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.”

The bill and accompanying documents can be viewed on the parliament website.