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Groceries Adjudicator Bill Warmly Welcomed

NFU Scotland has warmly welcomed the UK Government’s long-awaited introduction of the Groceries Code Adjudicator Bill but has warned MPs not to bow to retailer bluster at the last hurdle and to establish a referee which has the power to oversee the Groceries Code effectively.

The pressure to introduce a Groceries Code Adjudicator Bill, which was announced by Her Majesty the Queen at today’s State Opening of Parliament, has been gathering steam for more than a decade. During this time NFUS has been closely involved in Competition Commission investigations of the groceries sector, which found that big retailers were abusing their power in the market and were transferring "excessive risk and unexpected costs" to farmers, growers and suppliers. 
Today’s announcement outlines a Bill to achieve the following:

Protect suppliers by ensuring that large retailers treat them fairly and lawfully;

Break down the climate of fear amongst suppliers and farmers by ensuring they can raise complaints confidentially with the Adjudicator;

Ensure that large retailers can be held to account if they break the Code;

Support investment and innovation in the supply chain by stopping supermarkets passing on excessive risk and costs to suppliers; and

Act in the long-term interest of the consumer.

NFU Scotland’s Vice-President, Allan Bowie said:

"I welcome today’s announcement, which has been a long time coming. However, we still have a long way to go in creating a grocery retail sector in which the retailers do not hold all the cards. As today’s announcement was being made, our dairy farmers were getting to grips with the reality of the grocery market as they endure the latest round of unnecessary and unreasonable price cuts.

"UK farmers want to continue to produce high quality food and drink and we know that British consumers want to buy it. This relationship is suffering however, as it is conducted through some of the major retailers’ distorted prism of profit and supply chain control.

"The well-meaning Groceries Code, which was published in 2010, has ultimately proven ineffective because producers have feared exposure if they complained. If we are going to put an adjudicator in place, let’s make sure, once and for all, that he or she can effectively arbitrate disputes, investigate anonymous complaints on the basis of any credible evidence and impose heavy fines where the code has been breached.

"We must also not be hoodwinked by retailers’ complaints about the cost of paying for the adjudicator, nor their threat that the cost will have to be passed onto consumers. Compared to retailer profit, the operating costs of such a department would be minimal and they can afford it easily; moreover, retailers with an excellent relationship with their suppliers – and they do exist – would have nothing to hide and the operating cost is ultimately a small one to pay in order to ensure that British farming survives and thrives."

Notes to editors

The main elements of the Bill are as follows:

Creating an Adjudicator, as set out in the draft Bill. The Adjudicator's role would be to ensure adherence to the Groceries Code. He or she would do this by arbitrating disputes between retailers and suppliers, investigating anonymous complaints and taking sanctions against retailers who break the rules.

The Groceries Code which the Adjudicator would be responsible for upholding was put in place by the Competition Commission. It obliges large retailers (those with a groceries turnover in the UK of more than £1 billion) to: deal fairly and lawfully with their suppliers; not vary supply agreements retrospectively, except in circumstances beyond the retailer’s control which are clearly set out in the supply agreement; and pay suppliers within a reasonable time.

In addition, the Groceries Code limits large retailers’ power to: make suppliers change their supply chain procedures or pay marketing costs and compensation for wastage; make suppliers obtain goods or services from third parties who pay the retailer for that arrangement; make suppliers pay them for stocking their products or pay for promotions; make suppliers pay for resolving customer complaints; and "de-list" suppliers – in other words, to stop dealing with a supplier or make significant reductions to the volume of purchases from a supplier.

The draft bill and accompanying documents:

http://www.bis.gov.uk/policies/business-law/competition-matters/market-studies/cc-market-investigation-on-the-uk-supply-of-groceries

The Groceries Code Adjudicator - Commons Library Standard Note

http://www.parliament.uk/briefing-papers/SN06124

The Government response to the consultation on the Competition Commission’s recommendation to establish an adjudicator was published on 3 August 2010 http://www.bis.gov.uk/policies/business-law/competition-matters/market-studies/cc-market-investigation-on-the-uk-supply-of-groceries

Contact Sarah Anderson on 0131 472 4108

 

Date Published:

News Article No.: 46/12


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