Supermarkets could face fines if they fail to comply with the new grocery supply code after an influential parliamentary committee called for the powers of the Groceries Code Adjudicator to be extended.

Under existing proposals, the Adjudicator would have relied on ‘naming and shaming’ retailers guilty of breaking the code. But cash penalties could now be introduced, following the intervention by the House of Commons’ business select committee.

“We propose that fines be an available penalty from the start,” said Labour MP Adrian Bailey, who chaired the committee.

The body also said trade associations should be able to provide evidence to investigations on behalf of suppliers, guaranteeing anonymity for the suppliers involved. Its report will be sent to the Department for Business, Innovation & Skills today.

“We heard strong arguments that indirect suppliers to large retailers, such as farmers, should be able to draw attention to potential code breaches despite not being covered by the code,” Bailey said.

“We were convinced that trade associations can act as a useful source of evidence and provide helpful additional anonymity for suppliers.”

The committee also hit back at criticism from retailers over the operating costs of the new ombudsman.

“The costs of operating the new body will not be great compared with the size of the groceries market,” said Bailey, urging the government to “move ahead with legislation as soon as possible”.

Suppliers welcomed the committee’s findings.

“We are extremely pleased to see that the Adjudicator’s powers should be extended to include information from trade associations when deciding whether to launch an investigation into breaches of the code,” said Nick von Westenholz, governmental affairs chief at the National Farmers’ Union.

“The committee has also recommended that the power to fine retailers for breaches of the code should be available to the Adjudicator from the outset – something we have also argued for strongly.”

Business minister Edward Davey added: “I welcome this publication. The government is committed to establishing a Groceries Code Adjudicator and this report will help us to present a strong Bill to Parliament. I will carefully consider their recommendations and respond to them in full.”

Read more
GCA Bill gets backing from Waitrose (9 July 2011)
Retailers accused of ‘irresponsible’ delay tactics over GSCOP (2 July 2011)