The Groceries Code has ensured an adjudicator will arbitrate disputes between retailers and suppliers.

Sainsbury's

Why are we talking about this?

Last week’s Queen’s Speech for the opening of Parliament, setting out Government priorities for the coming year, included the Groceries Code Adjudicator Bill. The adjudicator will be responsible for upholding the Groceries Code.

What does that mean exactly?

The Groceries Code came into force in February 2010 and all retailers with groceries turnover of more than £1bn – a total of 10 companies – must comply with its requirements about how they deal with suppliers.

The proposed adjudicator will arbitrate disputes between retailers and suppliers, investigate complaints from direct and indirect suppliers in the UK and overseas and “hold to account” retailers that break the rules by naming, shaming and even fining them. Ministerial approval is needed for a fine to be imposed.

The bill was published in the House of Lords last week. Business minister Norman Lamb said: “Free and fair competition is the key to a healthy market and by preventing retailers from transferring excessive risk to their suppliers, we will support investment and innovation in the supply chain. In the long term, that’s in the best interests of everyone, especially the consumer.”

How have suppliers responded?

Unsurprisingly they are broadly supportive, although some think the proposals do not go far enough and are frustrated at the lengthy process.

Forum of Private Business senior policy adviser Phil McCabe said: “For too long small firms have suffered at the hands of the supermarket giants, but the bill should go some way to rebalancing the relationship.”

Food and Drink Federation director-general Melanie Leech said: “We need an effective adjudicator to enforce the code and ensure suppliers have the confidence to come forward directly or through their trade associations.”

What do retailers think?

The BRC harbours concerns, including the fact that complaints can be made anonymously. Andrew Opie, the trade association’s food director, said: “The Government’s priority as it pushes ahead with this bill should be to keep it as simple and as fair as possible.

“The adjudicator should only be able to pursue specific complaints from suppliers which have direct relationships with the retailers.

“Allowing third-party complaints would open retailers up to malicious campaigns and fishing expeditions from those without full knowledge of the agreements involved, at a great cost to all parts of the supply chain.”