Draft Bill For Supermarket Watchdog Announced

UK – The government has published its draft bill for a groceries code adjudicator. The bill comes after the constant outrage at supermarkets who have been accused of price fixing and unfair practice. Supported by suppliers, the plans have come under criticism from supermarket representatives.
calendar icon 25 May 2011
clock icon 4 minute read

The bill sets out a new independent body which will be responsible for monitoring and enforcing the Groceries Supply Code of Practice (GSCOP). The new body will referee between suppliers and retailers to protect against unfair practices and to prevent retailers passing on excessive risks or unexpected costs. The adjudicator will also be able to start investigations about potential breaches of the Code based on complaints from suppliers and/or information in the public domain.

Consumer Minister, Edward Davey, published the draft Groceries Code Adjudicator Bill and invited pre-legislative scrutiny of the Bill by Parliament.

Mr Davey commented: “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: “We want to see a food industry where farmers and food producers are getting a fair deal, and consumers can buy the high-quality, British food they want at a price they can afford”.

“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”.

The Welsh National Farmers Union (NFU) has also commented on the draft bill stating that suppliers are now a step closer to a better deal.

NFU Cymru President, Ed Bailey, said: “The NFU has worked tirelessly for over a decade, both in public and behind the scenes, to put in place both an effective code of practice for retailers, and a proper body to police it”.

Similarly, NFU Scotland Vice-President, Alan Bowie, agreed with the bill and added that the adjudicator should work to benefit consumers, as the current price unfairness affects customer choice.

He added, “what we need to do now is get to the bottom of exactly how much power this adjudicator will have. To police the sector effectively, the adjudicator should be able to proactively seek out anomalies; they shouldn’t have to necessarily be presented to him. Suppliers must also be able to report to the adjudicator confidentially and anonymously, to address the climate of fear that has prevented them doing so previously".

However, British Retail Consortium Food Director, Andrew Opie, has stated that the bill will achieve nothing apart from higher costs for consumers as retailers are forced to increase their prices.

Mr Opie continued: "The Bill says the adjudicator will cost only £800,000 a year to run, to be paid for by the ten biggest food retailers. If the Government really believes a public body can be run that cheaply it should cap the charges imposed on them at that level and commit to funding any extra costs itself".

"It's in supermarkets' own interests to have good long-term relationships with their suppliers as part of securing their supply chains. The Groceries Supply Code of Practice has been in existence for more than a year. So far as we can discover, it has not resulted in even one dispute between stores and suppliers going to independent arbitration. This begs the question – What will a grocery code adjudicator do all day?", Mr Opie concludes.

Mr Bowie however said that large retailers make enough profit in a couple of hours of trading to cover the cost of an adjudicator for a whole year. There is no reason why any additional costs to retailers can not be swallowed up in their sizeable margins.

In August 2010, the Government published its response to the consultation to take forward the establishment of a body to monitor and enforce the Groceries Supply Code of Practice (GSCOP). This draft Bill is the result of this consultation and the Competition Commission’s Market Investigation on the Supply of Groceries in the UK.

Pre-legislative scrutiny will start the parliamentary process for enacting the Groceries Code Adjudicator.

As part of the Government’s commitment to increase transparency and accountability of Parliament to the public, the draft Groceries Code Adjudicator Bill is written in a way that helps wider understanding. The governement have stated that this is the easiest to understand bill they have ever published.

Funding for the GCA will come from designated supermarkets via a levy. Those supermarkets with an annual UK turnover of £1 billion are designated.

The draft bill can be viewed at: www.bis.gov.uk

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