New adjudicator to protect supermarket suppliers

There’s to be a new Groceries Code Adjudicator with increased powers to protect supermarket suppliers from unfair practices.

The adjudicator will be responsible for enforcing the Groceries Code, which was put in place by the Competition Commission in 2008. It applies to the 10 retailers with a turnover in the groceries market in excess of £1bn.

The code obliges retailers to comply with several requirements including:

• dealing fairly and lawfully with their suppliers;
• not varying supply agreements retrospectively, except in circumstances beyond the retailer’s control which are clearly set out in the supply agreement; and
• paying suppliers within a reasonable time.
• The code is legally binding on retailers but ministers believe an adjudicator is necessary to ensure large supermarkets are fully compliant.

The adjudicator will be able to hold retailers to account by naming and shaming them or by imposing a fine if they break the rules. He will also be able investigate confidential complaints from direct and indirect suppliers, and from third parties.

The adjudicator will be expected to arbitrate between retailers and suppliers if required.

Competition Minister Jo Swinson said: “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.”

The post of the adjudicator is being created within the Groceries Code Adjudicator Bill, which is currently passing through Parliament. Once the Bill comes into effect, the adjudicator will publish guidance and propose the maximum fine he or she can impose. Retailers will have a full right of appeal.

Please contact Deborah Rupping for more information about the issues raised in this article.