Supermarkets watchdog will be neutered, say critics

Ministers have dismissed calls for supermarkets who break an industry code to be fined by the soon-to-be-established Groceries Code Adjudicator, preferring to rely on naming and shaming of offenders as a deterrent.

The Government is also set to prevent supermarket employees who blow the whistle or trade associations such as the National Farmers’ Union (NFU) from sparking an investigation.

The decision has angered farmers and political opponents who are already frustrated at how long it is taking for the adjudicator – recommended by the Competition Commission after complaints that big retailers have bullied farmers and small suppliers – to be introduced.

NFU president Peter Kendall said: “Frankly, at a time when retailers are engaging in another round of aggressive price cutting, it is more important than ever that we ensure they play fair with their suppliers, so that they can continue to invest and innovate for the benefit of both consumers and food producers.

“Sadly, as things stand the adjudicator will be badly hampered in its ability to do so, making it unfit for purpose. It is hard not to detect the dead hand of the retailers at play behind the Government’s reticence to establish an effective regime to police the code.”

The British Retail Consortium, representing the supermarkets and other big buyers, has repeatedly argued that the watchdog will achieve very little other than adding to the costs they have to pass on to customers, and rejects claims of bullying.

But the Government has vowed to act after years of complaints that the biggest retailers can abuse their powers to intimidate suppliers.

The main role of the adjudicator will be to uphold the Groceries Supply Code of Practice which came into operation last February and to arbitrate between retailers and suppliers over disputes. It will be able to investigate retailers whose turnover exceeds £1bn.

A draft Bill was introduced earlier this year and Ministers will now make some changes before introducing a final Bill to establish the adjudicator. However, there has been tension over whether to allow complaints from whistleblowers and introduce fines.

The Government said it will consider further the arguments for allowing whistleblowers and trade associations to trigger an investigation, although it said its “position at this stage remains” not to allow this to happen. Ministers say only direct or indirect suppliers should be able to register complaints and say allowing whistleblowers to trigger a probe could be abused by retailers to attack rivals.

On the issue of fines, the Government said there was already a “powerful deterrent” for retailers in the risk of being investigated and publicly identified and so “remains of the view that financial penalties should be kept as a reserve power”.

Mr Kendall said the code would lack “real teeth” without the extra powers and Labour Shadow Environment Secretary Mary Creagh, MP for Wakefield, said the adjudicator would be “neutered from the start”.

She said: “This Government is out of touch with farmers, food processors and consumers alike, when food prices have risen six per cent in one year.

“They should be standing up for shoppers who are feeling the squeeze and the food producers who are the engine for jobs and growth in this, the country’s largest manufacturing sector.”

Labour also criticised “huge delays” in introducing the Bill.