Retailers and suppliers are being urged to have their say on draft legislation to establish an adjudicator to oversee the Groceries Supply Code of Practice (GSCOP) at an estimated cost of £120,000 per supermarket.
Businesses have until 19 July to submit comments on the draft Groceries Code Adjudicator Bill, which was published for scrutiny by Parliament on 24 May. When passed, this will become the Groceries Code Adjudicator Act 2011.
The adjudicator will be funded by a levy to be paid by the large retailers - estimated at approximately £120,000 per retailer per year.
Sarah Whibley, a food sector specialist at Vertex Law, said: “This bill has been a long time coming. GSCOP came into force in February 2010 - as the long-awaited result of an extensive investigation by the Competition Commission - and the decision to appoint an adjudicator to enforce its terms was made in August 2010.”
“Now that we finally have draft legislation, it is important that the food industry makes its views known before it is too late to influence the final shape of the bill.”
The adjudicator will act as arbitrator in disputes between retailers and their direct suppliers and will be able to start investigations about potential breaches of GSCOP based on complaints from suppliers or information in the public domain.
Under the bill, the identity of a supplier who has complained is protected but the supplier must disclose its identity to the adjudicator. If a retailer is found to have breached GSCOP, the adjudicator can decide to make recommendations to the retailer, require it to publish information about the investigation or impose a financial penalty on the retailer if the secretary of state adds a power to do so. All costs of arbitration will be paid by the retailer
Whibley added: “This is, of course, a draft bill and, whilst it does what most expected, it does not go as far as to cover a variety of concerns that have been voiced since the announcement that an independent adjudicator would be appointed.
“One concern was that the adjudicator would not be truly policing compliance with GSCOP, because its remit is to act on suppliers’ complaints, rather than actively monitoring the behaviour of the retailers, with another major concern being the lack of severity of the punishments that the adjudicator can impose, with financial penalties being unlikely.
“Jim Paice, the minister for food and agriculture, has said that the proposed adjudicator gives teeth to GSCOP and will mean that bad practices can be stamped out and suppliers given the opportunity to raise legitimate disputes confidentially.
“The retailers say that, as they will be responsible for the costs of the adjudicator, the consumers are likely to suffer as this may well lead to higher prices in store. This has been challenged by the NFU on the basis that the £120,000 annual cost is negligible compared to the size of retailers’ CEO salaries.”
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