The Business, Innovation and Skills (BIS) select committee’s report published today, Time to Bring on the Referee, examines the government’s proposed bill to establish the office.
Introduced in February 2010, the Groceries Supply Code of Practice measures include forbidding the unfair levying of costs on suppliers by retailers; limiting the cost to suppliers of paying for promotions, listings and consumer complaints.
It also requires retailers to serve reasonable notice regarding delistings and explain the reasons for them.
But without the impartial policing role effected by the GCA, trade bodies have warned that suppliers were loathe to raise grocery code with the retailers themselves for fear of committing, in the words of the British Brands Group, “commercial suicide”.
FDF director of communications, Terry Jones, said the committee had recognised suggestions offered by the trade body to improve the bill.
“We now need to see the government take on board these recommendations and introduce an amended bill to Parliament as soon as possible,” he said.
Power to fine
Jones added: “Our recommendation that the GCA has the power to fine right from the outset, rather than just ‘naming and shaming’, has also been taken on board.
“This will be a more effective deterrent to those looking to breach the Code, and we want this to be reflected in the new bill presented to Parliament.”
Jones said an effective GCA would be good news for both consumers and suppliers, particularly SMEs.
“A strengthened code alongside a GCA with teeth will ensure that grocery suppliers have the confidence to innovate and invest, offering choice and availability to consumers.”
The British Retail Consortium (BRC) said it was disappointed by the committee’s allowance of anonymous and third-party complaints to the adjudicator.
But the trade body welcomed the MPs' recognition of “substantial investment made by large retailers to ensure compliance with the code.”
Fishing trips
The BRC also supported the committee’s conclusion that a high evidential threshold should be set before the adjudicator launches an investigation, and that his/her office should only respond to complaints, not go on “fishing trips”.
BRC food director Andrew Opie said it was in the supermarkets’ own interests to have good long-term relations with suppliers and that an adjudicator was not needed.
“But, if the government is set on introducing one, it must keep the regulatory burden and related costs down to avoid higher shop prices for customers,” he warned.
Opie said the BRC was pleased that the committee had agreed with the trade body’s concerns about the accuracy of previous costings for the adjudicator’s office.
“The draft Bill said the Adjudicator would cost only £800,000 a year to run, to be paid for by the 10 biggest food retailers,” he said.
“We look forward to a more realistic assessment and to working with government to make sure safeguards are built into the final bill and there’s an early performance review once it is up and running.”
Meanwhile, the Food Ethics Council (FEC) has also welcomed the report, declaring that a strong GCA would be "good for producers (and) good for consumers".
Sean Roberts, Food Ethics Council's policy director, said: "The market dominance of a small number of large retailers has had severe adverse consequences for farmers and other suppliers – including reduced margins, additional costs, unreliability of contracts, and the transfer of risk. This clearly makes the case for ensuring that the GCA has the necessary powers to perform its role effectively.
"The Food Ethics Council is pleased that the BIS Select Committee has recognised the concerns expressed by stakeholders from all sectors – business and civil society – that the GCA will not have adequate powers to ensure that suppliers get a fair deal from large grocery retailers. We now urge the government to reflect those concerns in an amended Bill to Parliament without delay."