Retailers face fines for fleecing suppliers
Filed under: News
But will the new measures, to be announced in the Queen's Speech tomorrow, be effective?
Supermarket Sweep - Tips & Advice
Difficult to know yet. In the past smaller suppliers have alleged bullying: forcing suppliers to take the profit hit for special offers or screwing them down hard on terms and conditions. The flip side of a supermarket deal is that it supplies a steady income stream. So a supermarket relationship for a small supplier can be a double-edged sword.
The British Retail Consortium (BRC), a lobby group for retailers, claims the new Groceries Code Adjudicator move will add red tape and bureaucracy, as well as possibly pushing supermarket prices up.
"The much-heralded Groceries Code Adjudicator will only cover supermarkets' relationships with direct suppliers," says the BRC. "It is a myth that it will make any difference to the majority of farmers."
NFU supportAdditionally, the BRC claims suppliers already have extensive protection, including the right to independent arbitration under the existing Groceries Supply Code of Practice, overseen by the Office of Fair Trading.
But the National Farmers Union (NFU) does think the move will be effective. Nick von Westenholz, head of Government Affairs at the NFU, told AOL Money that they've supported the idea for several years. "We have to be careful though to give the impression it will be a panacea. There are still far too many stories of farmers being treated unfairly by retailers."
The retailers - any supermarket with a turnover of more than £1bn - will fund the new Groceries Code Adjudicator scheme. It's thought the cost will cost each supermarket around £200,000 per year. About the price of one exec salary.
To that extent, von Westenholz says any claim by the supermarkets that that the costs will hit check-out prices is "disingenuous".