August 06, 2010 - Anonymous

Bullying supermarkets could be named and shamed

Supermarket giants face being named, shamed and fined if they bully small suppliers, under new plans unveiled by the Government, writes Kate Horstead.

From 2012, a new Grocery Code Adjudicator (GCA) will oversee the relationship between supermarkets and suppliers, with the aim of resolving disputes between suppliers about the way they are treated by big name supermarket brands.

The new body will be funded by supermarkets and will enforce the Groceries Supply Code of Practice established in February to govern relations between supermarkets and suppliers. Food suppliers who make complaints will be allowed to remain anonymous.

Practices likely to provoke action by the GCA include the imposing of prohibitive charges on suppliers to stock products in stores or the retrospective altering of supplier contracts in favour of retailers.

“We want to make sure that large retailers can’t abuse their power by transferring excessive risks or unexpected costs onto their suppliers,” said consumer affairs minister, Ed Davey.

Small suppliers would be treated in exactly the same way as larger suppliers, a Department of Business, Innovation and Skills (BIS) spokesperson said. “Size isn’t an issue here. Small businesses will be able to make a complaint directly to the GCA if they feel that they’ve been badly treated.”

James Lowman, the chief executive of the Association of Convenience Stores, welcomed the proposals as a “pro-competitive step” that would prevent “the worst abuses of buyer power”.

But others have criticised the GCA as a “watered-down” solution. Initially, the GCA will not have the power to fine supermarkets but, according to BIS, financial penalties could be introduced at a later date if negative publicity arising from naming and shaming is not sufficient to deter offenders.

Stephen Robertson, director general of the British Retail Consortium, dismissed the GCA as an “unnecessary quango” that would push up costs to consumers.

“We already have the most regulated grocery sector in the world,” he said. “This will reduce the efficiency of the supply chain and customers will pay the price.”

However, the British Chambers of Commerce said the new GCA could help suppliers as long as it was “fair and impartial”.

The establishment of the GCA comes more than two years after the Competition Commission recommended a watchdog. The adjudicator will only deal with disputes between suppliers and supermarkets and will not become involved in consumer complaints.