The government has decided against extending the role of Groceries Code Adjudicator Christine Tacon to cover primary producers and manufacturers, claiming there was “no clear evidence” to support the move.
The decision, which will be a huge blow for campaigners who have long called for an extension of the powers, comes after retailers and the Adjudicator herself opposed the plans.
However, as exclusively predicted by The Grocer in 2016, the government is instead looking to expand the role of the Adjudicator to cover more retailers, in a move that could see the likes of Boots, Booker, B&M Stores, Compass, Ocado and Poundland brought under the jurisdiction of the GCA for the first time, alongside the top 10 supermarkets.
The government launched a call for evidence on the issue in October 2016, though the issue goes much further back; former PM David Cameron indicated his government would look to extend the GCA’s role.
There have been strong calls for the office to be extended to cover the relationship between food producers and farmers, led by the likes of the Groceries Code Action Network, a coalition of NGOs, unions and food groups. It said it was vital the Adjudicator was given more power to tackle abuses throughout the supply chain.
But in a joint statement issued this morning, business minister Andrew Griffiths and Defra minister George Eustice said the move would not be justified. Instead they unveiled a package of measures to help farmers in the supply chain.
The statement said: “On the basis of submissions to the call for evidence, we believe that any formal extension of the GCA’s remit would not be appropriate at this time. Although there are clearly a number of concerns relating to the experience of some farmers and growers in the supply chain, there is no clear evidence of systematic market failures.
“However, there is significant potential to explore more targeted and proportionate approaches to enable primary producers to survive and thrive. These should go beyond existing reliance on voluntary codes of practice and encourage greater transparency and fairness.”
The decision added: “There were different views about the form that any such action might take. These ranged from extending the GCA’s remit further down the supply chain to regulate contractual relationships between primary producers and processors or manufacturers, to bringing smaller retailers and the foodservice sector within the remit of the GCA.”
But it said it had received strong opposition from retailers, with the likes of the BRC having spoken out against the move, which it said supermarkets could not be expected to fund.
“By contrast, most of the large retailers highlighted problems with extending the GCA’s remit and argued against any further intervention. Several retailers commented that the GCA is successfully delivering against its remit and there are dangers in diluting its effectiveness by adding further responsibilities. There were concerns about funding and how any extended role for the GCA could be delivered in practice.”
But while dashing the hopes of those who wanted GCA Christine Tacon to take on the wider supply chain issues, a move she had repeatedly warned against, the government said the Competition & Markets Authority (CMA) would now look at how the Code could be extended beyond the 10 supermarkets currently covered.
“A number of respondents raised concerns that existing retailers or new market entrants may either currently or in the near future have an annual turnover of more than £1bn with respect to the retail supply of groceries in the UK and should therefore be formally designated as “large retailers” under the Code,” said today’s decision.
“The CMA has agreed to formalise its current activities, by reviewing publicly available information on an annual basis. Where there are reasonable grounds for suspecting that any additional retailer may have reached the turnover threshold specified in the order, the CMA will request further evidence from it. This will allow the CMA to assess whether that retailer should be added to the list of designated retailers.”
In October 2016, The Grocer revealed ministers were considering adding other retailers, wholesalers and hospitality companies to comply with the Groceries Supply Code of Practice.
Wholesale giant Booker is already in line to be brought under the CMA’s remit, if its merger with Tesco gets the go-ahead, but others could soon follow under today’s plans.
Reacting to the decision, Tacon said: “I welcome the government’s publication of its response to the call for evidence. I look forward to hearing from the Competition & Markets Authority about the process for designating any new large retailers and I encourage suppliers to take part in that process because the outcome will benefit them. As a result, more groceries retailers may find themselves regulated in the near future and I would urge them to think about what action they need to take to ensure they become Code-compliant.”