Major grocers could face fines of up to £1bn from the Groceries Code Adjudicator if they break new rules that come into force later this year.

Adjudicator and former Co-op farming boss Christine Tacon is this week beginning consultations on new rules and penalties before presenting them to the Government in October.

Tacon has been lobbied by some grocery groups to enforce maximum fines of 10% of turnover, however it is understood she is likely to recommend a lower figure with a maximum fine of up to £1bn, the Mail on Sunday reported.

Since June the adjudicator has had the power to arbitrate on behalf of suppliers in dispute with the 10 largest grocers as Tacon oversees the Groceries Supply Code of Practice introduced by the Office of Fair Trading.

The final decision on the powers of the adjudicator lie with Business Secretary Vince Cable, with the regulations set to be in place by the end of the year.