The Groceries Code Adjudicator has been handed the power to fine large supermarkets up to 1% of their UK turnover.
The new measures will sit alongside existing powers to issue supermarkets with recommendations to their future conduct, and to ‘name and shame’ those that have breached the Code.
The decision to introduce the fine comes just days after Prime Minster David Cameron said he wanted to give the Adjudicator more powers.
The National Farmers’ Union (NFU) has welcomed the new initiative, saying that it was a ‘positive step toward ensuring malpractice is eradicated’.
Commenting on the decision, Business Secretary Vince Cable said: “This important final step will give the Groceries Code Adjudicator the power it needs to address the most serious disputes between the large supermarkets and their direct suppliers.
“I created the Groceries Code Adjudicator to ensure a fair deal for those who supply goods to supermarkets such as farmers and small businesses. I am pleased today to be giving the Adjudicator the final element in a set of powers that will give this new body all the tools it needs to succeed in this challenging and important role.”
The Groceries Code Adjudicator was created in 2013 to enforce the Groceries Supply Code of Practice that, since 2009, has governed the commercial relationships between the UK’s ten largest supermarkets and their direct suppliers of food, drinks, and a range of household products.
NFU food chain adviser Tom Lander said: “While this is good news for those with a direct relationship with retailers. Conversations must now begin on how the Grocery Code can be extended further up the supply chain. We need to ensure more farmers are protected from unfair trading practices, which strip value out of the supply chain, affecting both producers and consumers.”