Supermarket watchdog bill passes first hurdle

A BILL designed to create a supermarket watchdog has received support from MPs on all sides and will now progress to Committee stage before coming before the Commons once more to be passed into law.

The Bill was supported by South Down MP Margaret Ritchie who said she was in favour of the primary motivation behind it - to create a dedicated and impartial adjudicator.

“However we must make sure that this does not become a missed opportunity to introduce lasting reform to the regulation of the relationship between producers, suppliers and consumers,” Ms Ritchie said during Monday night’s debate.

The MP said the broad coalition of signatories to a letter in the Sunday Telegraph, including the NFU, Action Aid and the FSB, is testament to the depth of feeling on this issue.

“Representing a rural constituency in Northern Ireland, where farming, fishing and tourism are the main economic drivers, there is a growing need to sustain the current economic base at a time of low economic growth,” Ms Ritchie continued.

“Producers of food and the consumers are facing daily economic and financial challenges and this Bill, if handled properly, affords an opportunity to redress the balance within the supply chain.

“At this point I would like to say that I do not want to paint an entirely negative portrait of the relationship between suppliers and the large supermarkets. I know that often they work together extremely well and there are many examples of good practice that can be found and that are central to the development of a sustainable supply chain. However it must be acknowledged that the regime for dealing with bad practice is not even close to what it could be.”

Ms Ritchie said that to provide that stability and protection to farmers and producers what is needed is the introduction of a Grocery Food Adjudicator that possesses the necessary statutory, legislative teeth to correct unfair practices that had been apparent for quite some time in the food market chain.

“As I have said there is broad support in the farming community for this Bill and for its provisions to be implemented. Farmers and their respective representative bodies have argued for years for action to prevent retailers treating their suppliers, and particularly smaller producers unfairly. The establishment of the Ombudsman or Adjudicator to monitor and enforce a code of practice has been the central part of this campaign in recent years, and to this end this Bill is welcome.

“Having accepted that such an adjudicator is necessary it is absolutely vital that it is adequately empowered and does not become a ‘paper tiger’. The adjudicator must have robust powers of investigation and enforcement to hold organisations that are engaged in bad practice to account.

“A primary concern here is that the adjudicator should be endowed with the capacity to accept representations, appeals and complaints from a range of interested parties including trade associations. I believe that not doing so in this Bill is a missed opportunity and will be looking to amendments in later stages of the Bill to address this,” Ms Ritchie added.

“If the adjudicator were empowered to receive representations from trade associations this would create a much needed “buffer” between the suppliers and the supermarkets. Too often suppliers fear that making complaints will prejudice their future business with large dominant retailers and are hesitant to initiate a complaint under the existing dispute resolution mechanism. Such a buffer could also enable a more harmonious relationship between suppliers and supermarkets. Furthermore the involvement of trade associations or representative bodies would allow a wider scope of analysis that takes in a wider picture of market practices rather than have cases that just focus on one supplier and one retailer,” added the MP.

“I would also support, as called on by the Competition Commission, the Adjudicator having the capacity to implement fines in the cases of serious breaches or cases of malpractice. A naming and shaming system is simply not strong enough to hold retailers to account when necessary. Large retailers will be delighted if the Adjudicator does not have the power to levy fines. I appreciate that the Government could introduce a “fining” system at a later stage through secondary legislation if the watered down approach is proving inadequate, but strongly contend that the Adjudicator must be able to fine retailers from the outset if the Code is breached.

“We must have learned by now, whether with energy market regulation, banking regulation that the regulator must have real teeth to have any influence or impact. Let’s not make the same mistake again with the groceries code adjudicator.

“From a devolved perspective I would add that it is regrettable that it seems that the adjudicator will not be tasked with addressing the producer price differential which exists between the North of Ireland and Great Britain or to oversee the practices of processors/intermediaries. This is something that is likely to fall outside the scope of the Bill but that I will be taking up with the devolved Minister and DEFRA.”

In conclusion, Ms Ritchie said it is clear that with this Bill there is the potential for real, lasting reform of the groceries market.

“However if we set up a weak adjudicator we will have undermined the new regime before it has been in operation for even a day. If we do not grant it the necessary powers to fine and to investigate without prejudice, on a statutory basis we will have missed a golden opportunity to rebalance the supermarket supply chain and provide support to our farmers and producers. It is in everyone’s interest, supplier, farmer and consumer, that we create a sustainable food supply chain that is profitable for all not just the dominant players.

“As this Bill makes its passage through Committee and Report stage, I hope that it will be suitably amended to ensure that remedies are provided which further protect the primary producer and the consumers,” she concluded.