UK’s ten largest supermarkets to have their relationships with suppliers closely scutinised
As legislation goes, there probably couldn’t be a timelier piece than the Groceries Code Adjudicator Bill, which was given royal assent yesterday.
With the horsemeat scandal rumbling on, the creation of the UK’s first independent adjudicator to oversee the relationship between the ten largest supermarkets (those with an annual turnover of £1 billion) and their direct suppliers should be welcomed. And, as we reported earlier this week, the pub industry looks to be following a similar path, with a consultation launched on proposals to give thousands of tenants a fairer deal on rent and beer prices.
The Groceries Code Adjudicator will enforce the Groceries Supply Code of Practice, which was established by the Competition Commission in 2010, after their 2008 market investigation found some large retailers were transferring excessive risks to their direct suppliers. The Code obliges large retailers to deal fairly and lawfully with their suppliers; not vary supply agreements retrospectively, except in circumstances beyond the retailer’s control which are clearly set out in the supply agreement; and pay suppliers within a reasonable time, in addition to a range of other actions.
Earlier this year, it was announced that the person tasked with the job of keeping the supermarkets in line would be Christine Tacon, who was awarded a CBE for service to agriculture in 2004. As adjudicator, she has the power to: arbitrate disputes between retailers and suppliers; investigate confidential complaints from direct and indirect suppliers, whether in the UK or overseas, and from third parties; and hold to account retailers who break the rules by ‘naming and shaming’ or, if necessary, imposing a fine.
The Groceries Code Adjudicator Act will come into force in June, and Tacon will publish guidance shortly after this, setting out how she will operate.
“This government is committed to ensuring that all businesses have access to fair and open markets,” said competition minister Jo Swinson. “I am sure that the adjudicator will make strides towards delivering fairer food supply chains and stronger growth in the industry.”
Given that many of our SMEs are suppliers to the big boys, we hope this will give them a fair opportunity to flourish.