Responding to widespread calls, the government has announced that the watchdog proposed to police the Groceries Supply Code of Practice will have the teeth to fine supermarkets that abuse power.
While the news has been widely welcomed by bodies representing manufacturers and farmers, the British Retail Consortium (BRC) argued that the decision was yet another piece of "disproportionate legislation" that undermined the UK's business-friendly credentials.
"The Competition Commission has consistently said supermarkets benefit customers," said BRC director general Stephen Robertson. "The government's decision to give the Groceries Code Adjudicator (GCA) the power to impose fines on retailers does not suggest the UK is the best place to do business."
Unnecessary and heavy handed
Robertson added: "We've long maintained that the power to impose fines is unnecessary and heavy handed and should be kept in reserve. The code already has a provision for 'naming and shaming' retailers that's a significant sanction and a much fairer system. Also, in the 2.5 years it has been operating, not one supplier has needed to go to arbitration to resolve a problem with a retailer."
In contrast, supplier bodies were unanimous in their approval of the government u-turn. The Food and Drink Federation, representing manufacturers, National Farmers Union and Forum of Private Business (FPB), together with the Labour opposition, have long argued for such powers for the GCA, but until now they have been resisted by the government.
Within six months of the GCA Bill coming into force, guidance will be published on the maximum fines the GCA will be able to impose. This will be considered by the secretary of state who will make the final decision, said legal firm Wragge & Co. Supermarkets will also have a full right of appeal against any fine.
"We have always supported the concept of the GCA, but said it would be seriously undermined without the power to fine, a tool without which would have rendered a body like this unfit for purpose from the outset," said the FPB's head of policy Alex Jackman. "Supermarkets understand one thing, and one thing only, and that's money. So it's just common sense for the adjudicator to be able to wield this kind of weapon as a measure of last resort in the worst cases of supermarket malpractice."
Do its job properly
Jackman added: "The adjudicator now has the means and the purpose to do its job properly and that's to be the guardian and friend of poorly treated suppliers."
The Food Ethics Council (FEC) and Campaign to Protect Rural England (CPRE) gave their support.
"A strong GCA will also play an important part in promoting environmental sustainability, by helping to 'nudge' consumers towards sustainable diets," said Sean Roberts, FEC policy director. "If we are going to move towards more sustainable consumption, then we need to place a higher value on the natural resources that contribute to the production of our food in other words, the environmental costs of food production need to be reflected in prices. But this would never have happened if retailers (and consumers) were able to avoid paying their fair share of these costs by pushing all of the burden onto producers."
CPRE local food campaigner Graeme Willis said: "This will help level the playing field for the businesses that struggle to compete with the supermarkets including food networks."