Thanks to the persistent efforts of Liberal Democrats, especially Business Secretary Vince Cable, the Prime Minister has agreed to our demands for the Groceries Code Adjudicator (GCA) to be able to impose significant fines on any large supermarkets who treat their suppliers unfairly.
The Adjudicator will now be able to impose penalties on the supermarkets of up to 1% of their UK annual turnover, dependant on the seriousness of the breach.
I was proud to build on the work of my predecessors Ed Davey and Norman Lamb, take the Bill through Parliament to create the Groceries Code Adjudicator in 2013. It was an important step to help govern the commercial relationships between the UK’s ten largest supermarkets and their direct suppliers – many of whom are farmers and small independent dealers.
At the time the Liberal Democrats pushed hard for the Bill to give the GCA powers to issue supermarkets with recommendations as to their future conduct, to “name and shame” those that have breached the Code and to be able to issue fines. The Code also includes specific provisions governing terms of supply, timing of payments, marketing and promotional costs, and payments as a condition of being a supplier.
Implementing the GCA’s recommendation that the maximum level of fine should be set at 1% of UK turnover will add to the weight of the GCA. The Conservatives have unsurprisingly opposed these sensible proposals for fines every step of the way.
Ensuring suppliers are protected and treated fairly by the large retailers they depend on is something Liberal Democrat MPs have campaigned for since before we entered Government. With a large number of seats in rural constituencies our MPs know that local economies need businesses that can compete on a level playing field. Large supermarket chains who engage in unfair practices to try and drive up their profits at the expense of farmers and small business owners will now be held to account.
For Liberal Democrats this is about fairness. The Conservatives seem to have little interest in protecting small suppliers, and are firmly on the side of the supermarket giants. In Government, the Liberal Democrats will continue to fight for a fair deal for businesses and we should be proud that we are giving these necessary powers to the groceries watchdog.
* Jo Swinson is Liberal Democrat MP for East Dunbartonshire, and was a Minister in the Department for Business, Innovation and Skills and Equalities Minister from 2012-15.
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4 Comments
Jo, it is very good to have MPs and ministers write on here and allow us to comment. However, I think the article would have been a bit better if it highlighted the point that there are good big businesses and bad small ones too, or if it detailed all the specific measures so we can make our own minds up on them. I am not really one for cheering general policy aims.
I do not think my opinion is very important, it is the points that I raise that I think matter.
Best regards
Well done for getting these new powers. This is welcome as far as it goes – which unfortunately isn’t very far since the basic concept of a Groceries Code Adjudicator is wrong. Simply put, the supermarkets (and other big retailers come to that) have far too much power relative to their suppliers. No amount of regulatory intervention is going to fix that because, in practice, regulators often have little power except at the margins. If they try to move strongly against powerful firms they are likely to be replaced or ‘reorganised’ unless they have very strong political support – which the Conservatives will never provide.
A better solution for the future would be to introduce legislation modelled on the American Robinson-Patman Act which addresses the root cause of the problem – power inequality. It remains technically on the statute books but one of the first actions of Reagan on becoming President was to direct that it not be enforced.
The success of this legislation is being closely monitored for those of us waiting to see what a statutory adjudicator for the tied pub trade – now coming thanks to Jo and Vince (and Greg Mulholland) will look like.
It has taken a long time for this first big case to come – the fearlessness needed in facing up to Tesco will be needed for the over-leveraged pubcos who are already looking for wriggle room in the legislation – aided and abetted by their Tory mates.
Agere with GF.The fundamental problem is that of power imbalance beteween small supplier and large supermarkets.If we take milk as a n example at one point the milk Marketing Board was a supplier cooperative ,but I seem to remember that it was removed as being anti competetive!
Its time we stopped cow towing to the monopolies and oligopolies that the so called free market has created in such areas as newspapers,food retailing,,energy and banking to name a few.
Its high time there was a fair competition bill which restricted market share to maximum of 10% and demanded equal tax treatment for all companies.