The government’s decision to bring forward new legislation for a Groceries Code Adjudicator (GCA) to regulate relationships between supermarkets and their suppliers has not been widely welcomed by the retail industry.
Department for Business plans will give the new quango the power to receive complaints about the way the UK’s grocers interact with their primary suppliers from anyone in the supply chain at home or abroad, and deal with them anonymously.
Retail Analyst Jonathan Banks does not think the grocery market needs more regulation.
“I’m not an apologist for retailers, but we shouldn’t confuse unfairness with the power of being a big company,” he explained. “There seems to have been a misunderstanding of how business works.”
“It is popular for the public to say nasty multiples are driving others out of business, but the UK’s supermarkets are just good at what they do.”
GCA advocates say the new code will ultimately benefit consumers, but Banks says supermarkets already bring huge benefits to customers every day.
Turning the government’s plans on their head, he indicated that consumers may be better off without the new adjudicator.
“Government wastes money in so many different ways that millions of pounds could be saved if the number of quango-style departments were cut. People would spend less on tax, and progress in cancelling out the budget deficit would be made.”
The British Retail Consortium (BRC), which represents the retail industry and lobbies the government on issues concerning the sector, has called the GCA “unjustified”.
According to the consortium, the government should not be creating an adjudicator before the impact of the newly updated Groceries Supply Code of Practice, unveiled in February this year, has been fully assessed.
BRC Director General Stephen Robertson suggested the UK already has the “most over-regulated grocery sector in the world”.
Consumer Minister Edward Davey said the idea behind the code is to ensure large retailers do not abuse their power by shifting “excessive risks or unexpected costs” onto suppliers.
In response, Banks said: “I don’t see the connection with the minister’s comments and what is going on in the industry.
“Big supermarket suppliers such as fast moving consumer goods firm Reckitt Benckiser wouldn’t say they’re being taken to the cleaners by the big supermarkets. The top grocers in the UK are just trying to get the best deals - that’s just business.”