Labour vs the supermarkets: Plans for new watchdog to stop retailers squeezing suppliers

The new regulator would be built out of the current Groceries Code Adjudicator (GCA), which is widely seen as 'toothless'

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A powerful “supermarket watchdog” will be established by Labour to prevent big retailers from bullying their suppliers, as the party positions itself as the champion of farmers and consumers.

The new regulator would be built out of the current Groceries Code Adjudicator (GCA), which is widely seen as “toothless”, Maria Eagle, the shadow Secretary for Environment, Food and Rural Affairs, told The Independent.

The watchdog will be better equipped to stop the major grocers from squeezing their suppliers because it will be allowed to launch its own investigations into any contract where it suspects abuse of power through late payments, last-minute deductions and other forms of malpractice, Ms Eagle said.

The new-look watchdog will also be able to consider the impact of behaviour of the 10 biggest supermarkets on the entire supply chain.

“We need a tough supermarket watchdog to make sure the big supermarkets don’t exploit their farmers and producers. But the GCA has a very narrow remit so it can only focus on their direct suppliers and can’t deal with the supply chain,” Ms Eagle said.

 

“It can’t do investigations so people have to come to it – and of course if you’re being beaten over the head with a big stick by the only outfit that buys your product you don’t necessarily complain about it because you’re worried about what the implications are for your business,” she added. “We’re going to expand its role and powers and create a tough supermarket watchdog that can deliver a much fairer deal to our farmers and those who supply these big retailers.”

Ms Eagle stressed that she was not criticising the GCA head Christine Tacon “in any way” but rather her powers and remit.

The need for a tough regulator is particularly apparent in the UK milk industry, she said, where 10,000 dairy farmers, or half of the total, have gone out of business in the past decade as supermarkets force them to keep cutting their prices.

Most of the milk sold in supermarkets is supplied directly by the processors, which in some cases are supplied by hundreds of local dairy farmers. The supermarkets squeeze the processors, which pass the cost cuts on to the farmers – who have no recourse because, as an indirect supplier to the supermarket, they are not represented by the GCA, Ms Eagle said.

Labour’s pledge comes a day after the Government rejected a call from MPs to extend the remit of the GCA to provide better protection for dairy farmers.

The Government has recently granted the GCA the power to fine supermarkets up to 1 per cent of their annual sales for any misconduct it uncovers from next month. Ms Eagle welcomes the change but questions whether 1 per cent is enough and says she will look into increasing it if Labour is elected.

The National Farmers’ Union was encouraged by Labour’s pledge.

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The national farmer's union has backed the pledge (Getty Images)

“The NFU welcomes the notion to extend the remit of the Groceries Code Adjudicator back to farmers. We have long called for fairness in supply chains and believe this is key to the future prosperity of the agri-food sector,” a spokesman said.

Tim Lang, professor of food policy at City University, added: “I welcome Labour’s commitment. It’s a sign that, at last, politicians see the vital importance of the UK food system and of the limitation of blind faith in the market.”

Ms Tacon told peers in the House of Lords this month that her watchdog had found it “difficult to get suppliers to come forward” with evidence of breaches of the industry code of practice.

Her comments backed up a YouGov survey last year, which found that 58 per cent of suppliers feared retribution from big supermarkets.

Last month the GCA launched its first and only investigation – into Tesco. The probe comes in response to allegations that it was unfairly fining suppliers, docking cash from bills without agreement and demanding money from suppliers for better shelf-positioning in its 3,300 stores.

Tesco says it has taken action to strengthen compliance, is changing the way it works with suppliers and will continue to co-operate fully with the GCA in its nine-month investigation.

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