Duncan Swift, partner and head of food advisory group at accounting and business advisory firm Moore Stephens, welcomed Department for Business, Innovation and Skills (BIS) proposals to empower Christine Tacon to financially penalise supermarkets.
However, he said the move was largely pointless unless measures were also introduced to preserve the anonymity of suppliers lodging complaints about unfair treatment.
“Talk of putting in place powers to fine and extending her remit – neither will make a difference to improve the effectiveness of the code unless steps are taken to address the complaints process,” said Swift, who said the existing system effectively required suppliers to reveal their identity for action to be taken.
Ombudsman
“A formal supplier complaint is required before an investigation is launched, and however ‘confidentially’ that is treated, the likelihood is the investigation process will identify the complainant. The only way that concern will be properly addressed is for the adjudicator’s office to be upgraded to an ombudsman who can sample a range of relationships without need for any formal complaint.”
The Competition Commission originally recommended the creation of an ombudsman for the market in its Final Report, the Supply of groceries in the UK market investigation, published in April 2008.
However, BIS chose to appoint Tacon as adjudicator only, with weaker powers, on January 21 2013, a move criticised by some in the industry at the time.
“The current set up is like asking a referee to control a football match while sitting in the changing room,” said Swift, who was formerly head of Grant Thornton’s food and agribusiness recovery group and gave input into the 2008 report.
‘Political posturing’
He believes BIS’s proposals to empower Tacon to fine supermarkets up to 1% of their annual UK turnover are an example of “political posturing” prior to the May 7 general election.
In 2008, opponents of recommendations to create an ombudsman claimed the office would be too expensive for tax payers. Swift acknowledged that an ombudsman would be five times the cost of an adjudicator, but added: “That would only equate to 0.5p, yes half a pence, a week on the average family’s shopping bill.”
The National Farmers Union (NFU) welcomed BIS’s GCA proposals, but called for producers supplying manufacturers to be protected by the code, not just, as is currently the case, supermarkets’ direct suppliers.
‘Unfair trading practices’
“Conversations must now begin on how the Grocery Code can be extended further up the supply chain,” said NFU food chain advisor Tom Lander. “We need to ensure more farmers are protected from unfair trading practices, which strip value out of the supply chain, affecting both producers and consumers.”
Announcing the decision to enable Tacon to levy fines, subject to approval in the House of Commons and the House of Lords, business secretary Vince Cable said: “I created the GCA to ensure a fair deal for those who supply goods to supermarkets such as farmers and small businesses.
“I am pleased today to be giving the adjudicator the final element in a set of powers that will give this new body all the tools it needs to succeed in this challenging and important role.”
BIS stressed the new measures would sit alongside existing powers to issue supermarkets with recommendations as to their future conduct, and to ‘name and shame’ those that had breached the Code.