Fears grocery adjudicator will lack power to fine
A government bill to introduce a supermarket watchdog has completed its second reading in the House of Commons.
But concern remains that an adjudicator will not have the power to fine retailers from the outset.
The Groceries Code Adjudicator Bill, which will establish a watchdog to oversee the relationship between big supermarkets and suppliers, was debated by MPs for six hours on Monday (19 November).
Once in place, the adjudicator will have the power to impose sanctions against retailers that do not treat their suppliers lawfully and fairly as required by the groceries supply code of practice.
Business minister Jo Swinson said an adjudicator would promote growth and a competitive food and groceries sector – and help to ensure a fair deal for suppliers.
“In the current economic climate, it is more essential than ever that our groceries sector is allowed to grow and thrive,” she told MPs.
“Therefore, government, suppliers and retailers need to work together to ensure that the marketplace between supermarkets and suppliers is fair, open and competitive.”
The adjudicator will be funded by a levy from the 10 largest retailers.
It will have the power to investigate breaches and to impose sanctions against supermarkets found to have breached the code.
Ms Swinson said the adjudicator would have tough sanctions, including “name and shame” powers to require retailers to publish information about a breach in the trade or national press.
“There is quite a wide sense that, if the measure is to be effective, fines should be available from the start, not at some undetermined future date.”
East Ham MP Stephen Timms
“We think that those sanctions are powerful enough to uphold the code,” she said.
“However, if that proves not to be the case, the bill allows the secretary of state to grant the adjudicator a power to impose financial penalties as well.”
But East Ham’s Labour MP Stephen Timms said he did not understand why the adjudicator would not have the power to fine retailers from the outset.
“There is quite a wide sense that, if the measure is to be effective, fines should be available from the start, not at some undetermined future date.”
Ms Swinson said fines could be implemented within six months if necessary. “It would be fairly rapid if it was determined that things were not working,” she said.
But Ian Murray, Labour MP for Edinburgh South, said it wouldn’t be quick enough.
He warned: “The government will be scoring an own goal if it denies the supermarket watchdog the one tool that will make it effective: the power to levy fines from the outset.
“The evidence of supermarkets’ unfair treatment of suppliers-which includes farmers both here and in developing countries-is all too clear.
“Watering down the bill so that penalties only go as far as ‘naming and shaming’ will not be a sufficient deterrent and the Adjudicator risks failing in its job to hold supermarkets to account.”
Glyn Davies, Conservative MP for Montgomeryshire, said the only contention between the government and opposition was whether fines should be available at the outset.
“Naming and shaming and reputational damage will therefore probably have more force in pressurising them,” he told MPs.
“If that fails, even in the medium term, new primary legislation would not be necessary, because we could introduce fines.”
Farm minister David Heath summed up the debate.
Dairy farmers who had campaigned for higher milk prices during the summer showed that naming and shaming supermarkets could work, he said.
Mr Heath said he accepted many MPs had indicated that they would prefer to see fines from the start. “There are arguments about why that should not be the case,” he added.
These included the fact that it would introduce a new legal process of appeal.
The government believed it had “got it right” at the moment, but would listen to MPs and ensure that the legislation that is fit for purpose, said Mr Heath.
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