COMMONS

Committee calls for changes to powers of new Groceries Code Adjudicator

28 July 2011

In a report released today the Commons Business, Innovation and Skills Committee calls for changes to the Bill creating an adjudicator for disputes between suppliers and retailers under the Groceries Code. Among other things, the committee calls for the powers to fine to be made clear on the face of the Bill, and also wants changes to allow indirect suppliers such as farmers and trade associations – and whistleblowers - to be able to provide the evidence that would spark an investigation by the adjudicator.

Chair of the Committee, Adrian Bailey MP, said:

"Since 2001, a Code of Practice has protected suppliers to the larger supermarkets. In 2008, when the Competition Commission recommended a new Groceries Code to improve on the Supermarkets Code of Practice, part of the proposed package included setting up an Adjudicator to referee the Code. When a voluntary agreement to implement the proposal failed to materialise, the Commission requested legislative action.

Our committee has considered the Government's draft legislation for setting up the Adjudicator, and we can see the need for an Adjudicator to be established. We heard evidence of some improvement in Code compliance, but there is evidence too of continuing difficulties, and of reluctance by suppliers to invoke their rights under the Code. The Adjudicator will provide protection for suppliers in the form of a cloak of anonymity and will have its own powers to investigate alleged bad practice. We agree that those powers are needed so that suppliers will feel more secure in coming forward.

We do not believe that the Adjudicator needs powers to investigate proactively, without any supporting complaint. However, we have recommended widening the scope of the Bill to cover additional sources being able to put forward their own evidence of  Code breaches. We were convinced that trade associations can act as a useful source of evidence and provide helpful additional anonymity for suppliers. By the same token, there is a case for allowing whistle-blowers who are employees or ex-employees of a retailer to supply evidence of breaches. 

We also heard strong arguments that indirect suppliers to large retailers such as farmers should have be given a voice, and we therefore agree with the Government that they should be able to draw attention to potential Code breaches despite not being covered by the Code. We disagree with the Government on the introduction of fines, however. We propose that fines be an available penalty from the start, not least so that the Adjudicator's performance can be judged on the basis of a full package of remedies.

The costs of operating the new body will not be great compared with the size of the groceries market. Nevertheless, we are keen that costs should be kept to a minimum, and our report makes a number of suggestions on how the issue of costs should be addressed, including an early review of the Adjudicator's performance.

It is now already three years since the Competition Commission's recommendation for an Adjudicator. The Government should move ahead with legislation as soon as possible."

Further Information

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