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August 3, 2010

UK: Coalition outlines plans for grocery “adjudicator”

The UK government today (3 August) outlined plans for a body to monitor and enforce the code that oversees relations between suppliers and retailers.

The UK government today (3 August) outlined plans for a body to monitor and enforce the code that oversees relations between suppliers and retailers.

Suppliers at home and abroad will be able to anonymously direct complaints about their dealings with UK retailers to a Groceries Code Adjudicator (GCA).

Farmers who may not directly supply the multiples will also be able to approach the GCA.

Consumer minister Edward Davey said: “We want to make sure that large retailers can’t abuse their power by transferring excessive risks or unexpected costs onto their suppliers. These sorts of pressures are bad for producers and bad for consumers – ultimately they can lead to lower quality goods, less choice and less innovation.”

The GCA will be based within the Office of Fair Trading (OFT) but the Government said it will be kept independent from the normal decision-making process in the OFT.

There has, however, yet to be a decision on how the GCA will be funded. “The Government will reflect further on the fairest and most appropriate mechanism for retailers to fund the GCA.”

Funding of the scheme has been a major bone of contention for retailers, with the British Retail Consortium (BRC) saying it could cost consumers “millions of pounds” in higher prices and hand negotiating powers to the largest food makers.

The Government said that the deterrent that it expects to have the greatest impact on changes in retailer behaviour is that of reputation. However, it will provide powers in the primary legislation to introduce financial penalties should future experience indicate that a threat to reputation alone is not sufficient.

According to the Government report, all retailers strongly supported the revised and strengthened GSCOP, which came into force in February, but were opposed to the creation of the GCA. This was because the retailers felt they had taken the necessary steps and expense to comply with the strengthened GSCOP and were disappointed that the Government had decided to set up an enforcement body before giving the GSCOP an opportunity to bed in and prove it could work effectively without the need for further enforcement.

Minister for Food and Farming Jim Paice said: “The new adjudicator will help to strike the right balance between farmers and food producers getting a fair deal, and supermarkets ensuring their customers can get the high-quality British food they want at a price they can afford.”

The proposals to establish the GCA will require primary legislation and the Department for Business is seeking approval from the Parliamentary Business and Legislation Committee to publish a draft Bill later this year with the intention of bringing forward a Bill in the second session.

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