The ombudsman being set up to monitor the relationship between suppliers and retailers in the UK will not immediately look to fine a supermarket should it break the code governing their dealings.
Some producers and MPs had wanted the ombudsman – to be known as the Groceries Code Adjudicator – to have the power to fine retailers but the UK government has said it should be kept in “reserve”.
Two parliamentary select committees had recommended that the adjudicator have the power to fine retailers. However, in its response to the committees, the Government said there were already “powerful” deterrents lined up that meant it would not look to immediately arm the adjudicator with powers to fine.
The Government said the adjudicator would give the existing code “fresh impetus” and said retailers would want to avoid an investigation by the ombudsman.
It also said the prospect of negative publicity would also “encourage” retailers to comply with the code and insisted the “swift introduction of financial penalties” remained.
However, the Government added: “It wishes to allow time for the adjudicator, and the regime as a whole, to prove their effectiveness before introducing the additional sanction of financial penalties.”
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By GlobalDataIn another move that dismayed some suppliers, the Government also distanced itself from the Business, Innovation and Skills committee’s recommendation that evidence from whistleblowers could prompt an investigation from the adjudicator. The Government said it would “consider the matter further” before introducing the bill to set up the adjudicator.
The Government also refused to commit to another recommendation that evidence from trade associations could prompt an investigation.
The National Farmers Union said the Government’s decision to “ignore” the recommendations meant the adjudicator did not appear “fit for purpose”.
The Select Committees endorsed the need for the groceries code adjudicator to be given the power to take credible evidence from a wider range of sources, including representative bodies like the NFU, when deciding to launch an investigation into supermarket practices. “This is essential to ensure that the code can be made to work effectively,” NFU president Peter Kendall said.
“The role whistle-blowers within retailers can play in supplying evidence of breaches and giving the adjudicator the ability to fine retailers where it identifies breaches of the code are vital to ensuring the code has real teeth. These recommendations have not been accepted by BIS, which is a real kick in the teeth.”
The Food and Drink Federation, which represents UK food and drink manufacturers, said the Government’s response on trade associations was a “step forward” although it was disappointed by the decision on the power to fine.
“We are somewhat disappointed that financial penalties will not be available from the outset but accept the view that other sanctions and penalties will be powerful enough,” FDF director of communications Terry Jones said.
However, he added: “The Government’s response brings us closer to putting in place a referee to accompany the rule book. This will not only give manufacturers the confidence to innovate and invest but will protect choice and availability for the consumer. We need to see a new Bill presented to Parliament without delay and will watch its progress carefully with the overarching goal of securing robust enforcement of the Grocery Suppliers Code of Practice.”