A proposal to introduce an adjudicator for the UK grocery sector is expected to be announced tomorrow (9 May) in a move that would pave the way for the creation of a body to monitor behaviour in the supply chain.
Government plans to establish a Groceries Code Adjudicator are expected to be outlined in the Queen’s Speech tomorrow. The adjudicator would oversee the implementation of the Grocery Supply Chain Code of Practice (GSCOP), which was introduced in 2010 to address a perceived imbalance of power between retail multiples and their suppliers and followed an extensive investigation from the Competition Commission. However, the plans have proven a divisive issue for the UK food industry.
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Organisations representing farmers and food suppliers have widely welcomed the move, insisting that without enforcement powers the GSCOP would lack the muscle necessary to ensure fair-dealing down the supply chain.
In advance of tomorrow’s Queen’s Speech, Melanie Leech, director general of the Food and Drink Federation, the UK food industry association, said it believes an adjudicator will “help to ensure that the food chain operates fairly and in the best interests of consumers in terms of choice and availability”.
However, Leech added the FDF hopes the bill to introduce the adjudicator is made a “priority” and allows for third parties to initiate investigations. Draft legislation did not make any such provision.
“The Competition Commission findings were clear that unless the abuse of market power is addressed then businesses especially small and medium sized manufacturers will be less inclined to innovate and invest,” Leech said.
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By GlobalDataA spokesperson for the National Farmers Union also emphasised the need to allow third parties to initiate investigations. However, the spokesperson said the NFU has some further concerns about the potential adjudicator’s enforcement powers.
“There are some reservations that the draft bill does not go far enough. At the moment, the plan is for the watchdog to rely on ‘naming and shaming’ retailers who breach the Code of Practice and no provision is made to fine retailers who abuse their power and squeeze lower prices out of suppliers.”
However, the British Retail Consortium, which represents the UK’s retailers, denied retailers abuse their power.
Andrew Opie, the BRC’s food director, insisted the UK supply chain is a scene of “collaboration not conflict”.
“The adjudicator will make no difference to most farmers because few deal directly with supermarkets. What will help them is supporting retail investment in the supply chain not diverting money to an expensive new bureaucracy,” Orpie said.
“If the Government is determined to push ahead with its plans for a Groceries Code Adjudicator, it must keep the burden it imposes under control. My fear is a new body will be looking to make work and justify its existence, damaging the positive relationships retailers have established.”
Orpie said the adjudicator should not accept complaints from third parties and should only look to “pursue specific complaints” from “companies which are directly involved”.
“The costs of responding to fishing expeditions and complaints by third parties would just add costs and make it harder for retailers to keep shop prices down,” he added.
