Supermarket chains face fines of as much as 1 per cent of their UK sales if they treat their suppliers badly, under measures put to Parliament by Business Secretary Vince Cable.
The size of any fines would be dependent on the seriousness of breaches of the Groceries Code, which sets a principle for supermarkets of fair dealing with direct suppliers, including farmers, according to a statement e-mailed today by Cable’s Liberal Democrat party. The power to fine would rest with the independent Groceries Code Adjudicator.
The rules were “designed to make sure suppliers, such as farmers and small businesses, are given a fair deal by supermarket giants,” Cable said in the statement. The possible fines represent “the final element in a set of powers that will give this new body all the tools it needs to succeed.”
The code includes provisions on the timing of payments to suppliers, marketing and promotional costs, and payments requested from businesses and farmers as a condition of being a supplier. The fines add to existing powers to “name and shame” those that have breached the code.
The main UK supermarkets directed requests for comment to the British Retail Consortium.
“The adjudicator already has powers to name and shame, which is a significant penalty for a retailer as it could cost millions through reputation damage,” Andrew Opie, director of food and sustainability at the BRC, said by e-mail. “Supermarkets have been complying with the Groceries Supply Code of Practice since 2010, so fines do not change their approach to compliance.”
Bloomberg News, edited by ESM
