Supermarkets face fines of up to one per cent of their annual UK turnover if they do not treat their suppliers fairly under new measures laid out in Parliament.
The toughened powers give the Groceries Code Adjudicator (GCA) “all the tools it needs” to ensure a fair deal between supermarkets and those who supply them, such as farmers and small businesses, Business Secretary Vince Cable said.
The adjudicator will be able to impose penalties on the large supermarkets of up to one per cent of their annual UK turnover, dependant on the seriousness of the breach, the Department for Business, Innovation and Skills announced.
The measures being introduced will sit alongside existing powers to issue supermarkets with recommendations about their future conduct and to “name and shame” those who have breached the code.
It sets out a series of specific provisions governing the timing of payments, marketing and promotional costs and payments as a condition of being a supplier but does not govern issues relating to pricing.
“This important final step will give the Groceries Code Adjudicator the power it needs to address the most serious disputes between the large supermarkets and their direct suppliers,” said Mr Cable.
“I created the Groceries Code Adjudicator 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.”
The Groceries Code Adjudicator was created in 2013 to enforce the Groceries Supply Code of Practice that has governed the commercial relationships between the UK’s 10 largest supermarkets and their direct suppliers since 2009.