The coalition government has agreed to press ahead with plans to create a supermarket ombudsman to monitor the relationships between retailers and producers.
The grocery “adjudicator” will deal with complaints from farmers and suppliers to ensure supermarkets do not abuse their power.
Consumer minister Edward Davey made the announcement on Tuesday (3 August) after a Department of Business, Innovation and Skills consultation on how to enforce the Groceries Supply Code of Practice, which was launched in February.
“We want to make sure that large retailers can’t abuse their power by transferring excessive risks or unexpected costs onto their suppliers,” he said.
“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 adjudicator will be able to step in to prevent unfair practices continuing – ensuring a fair deal for producers and safeguarding the consumer interest.”
Farm minister Jim Paice said the adjudicator would “strike the right balance” between farmers and producers getting a fair deal and supermarkets procuring high-quality, affordable food.
The NFU welcomed the plans and said introducing an adjudicator was a crucial step towards rooting out unfair practice in the supply chain.
“I’m firmly convinced an adjudicator will benefit the whole chain – suppliers, retailers and most importantly consumers,” said NFU president Peter Kendall.
“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.”
But the British Retail Consortium said the adjudicator was unjustified and would add unnecessary costs.
Stephen Robertson, BRC director general, said the effectiveness of the exisiting code of practice, which already gave suppliers more protection, should be assessd before any further regulation was put in place.
“We already have the most regulated grocery sector in the world,” he added.
“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.
“The key concern for the Competition Commission was consumers not suppliers. I don’t see anything in this proposal that will help them.”
A draft Bill on the adjudicator is likely to be published in the autumn and introduced in Parliament late next year.