After a long consultation period, the UK government has outlined plans for a body to monitor and enforce a code of relations between suppliers and grocery retailers. The implementation of such a body has split the industry, with supplier favouring greater enforcement and retailers opposed to more regulation. Here is how the industry and campaigners reacted to today’s (3 August) news.
“We already have the most regulated grocery sector in the world. The code the ‘adjudicator’ would administer only applies to suppliers who have a contractual relationship with retailers but there’s a real danger the new body will generate lots of correspondence from suppliers who aren’t covered. Granting complainants anonymity offends against natural justice and would make it very difficult for retailers to respond to cases. With an independent budget and no direct reporting line to the Office of Fair Trading or Government this is a quango. Quango’s cost. This will reduce the efficiency of the supply chain and customers will pay the price. – British Retail Consortium Director General Stephen Robertson.
“We’ve observed it and will see how it develops.” – Dairy UK director general Jim Begg.
“It is true that we could quibble with some of what is proposed, but we also need to recognise just what has been achieved. We’re talking about more than a decade of full-on lobbying and submitting evidence to inquiries on the part of the NFU and other members of the Grocery Market Action Group. We haven’t got everything we originally asked for – a stand-alone Ombudsman outside the umbrella of the OFT, for example. And yes, we would have liked to see the Adjudicator in place earlier than 2012. Once in place, I do believe we will see fewer instances of flagrant bully-boy tactics used by the supermarkets over the years and reported to us by our members.” – National Farmers Union president Peter Kendall.
“We welcome the commitment from the Government to set up a Groceries Code Adjudicator to oversee the Groceries Supply Code of Practice. The pragmatic proposals outlined today will ensure that there is an effective, low-cost monitoring and enforcement body in place. We believe the Adjudicator will be of particular help for smaller businesses, ensuring that the food chain operates fairly and in the best interests of consumers and would urge the Government to make it a reality as quickly as possible.” – Melanie Leech, director general of the Food and Drink Federation.
“We have always supported the new Grocery Supply Code of Practice (GSCOP) which was introduced in February 2010, but we do not see the need for a Grocery Code Adjudicator. The GSCOP is much stronger than the old code, giving suppliers the right to independent binding arbitration, for example. Our preference therefore would be to review the effectiveness of GSCOP before deciding whether a new regulator is required. However, we recognise that the Coalition Government is committed to creating this new regulator. The intention is to have light-touch regulation, with the adjudicator’s powers restricted to GSCOP matters and we will be looking to Government to ensure that this is the case and that the regulatory burden and related costs are minimised.” – a Sainsbury’s spokesperson.
“Fixing the food chain doesn’t end here – retailers must also pay farmers a fair price for their product so that they don’t have to cut costs by importing cheap animal feed from South America that is wiping out forests. Instead of using taxpayers money to prop up damaging factory farming, the Coalition should support farmers to feed our farm animals home-grown diets and ensure less but better quality meat and dairy is provided in our hospitals and schools.” – Friends of the Earth’s food campaigner Helen Rimmer.
“We are pleased that the government have listened to our arguments that evidence from sources other than suppliers should be taken into account by the GCA, and that suppliers should be able to make complaints on an anonymous basis. These represent significant progress for those who want to see a fairer grocery market. Ministers have taken the decision to depart from the exact model provided by the Competition Commission and we will be scrutinising the GCA to ensure that it is effective in stopping the harms practices identified in the Grocery Market Inquiry.” – Association of Convenience Stores chief executive James Lowman.
“The government’s suggestion that possibly damaging an offending supermarket’s reputation will be a sufficient deterrent to improve in supplier relationships is naive. The Adjudicator must have the power to apply financial penalties from day one – then all supermarkets will see that there is a level playing field and they will gain no advantage by pressurising their suppliers.” – Paul Spray, director of policy at trade campaigners Traidcraft.