The Queen's speech has set out the Government's legislative plans for the next year which will include the Groceries Adjudicator Bill to establish an independent adjudicator to ensure supermarkets deal fairly and lawfully with the suppliers.

The Groceries Supply Order and new Groceries Code came into force on 4th February 2010. However, the Competition Commission considered that the Groceries Code would be more effective with an ombudsman or adjudicator in place to enforce it. In effect, to act as a referee and police the new rules. This was because many small suppliers were worried that raising disputes against retailers would jeopardise future commercial agreements with these companies.

Purposes of the Bill and of the Adjudicator as set out in the draft legislation

The sole purpose of the Adjudicator will be to enforce and oversee the Groceries Code in the ways described in the Bill. This will help to remedy some of the imbalance between large retailers and suppliers which was reported on by the Competition Commission. The report of the Competition Commission also considered that this would operate in the long term interests of consumers, because the Groceries Code would help to encourage innovation and investment by suppliers.

In order to help deliver these objectives, the Adjudicator established by the Bill will do the following things:

•    arbitrate disputes between large retailers and their direct suppliers, or appoint another person to do so. This will be part of the dispute resolution scheme provided by the Groceries Supply Order;
•    investigate possible breaches of the Groceries Code by large retailers; where an investigation finds that a large retailer has breached the Groceries Code, decide whether to make recommendations to the retailer, require it to publish information about the investigation or (if the Secretary of State adds a power to do so) impose a financial penalty on the retailer;
•    publish guidance on when and how investigations will proceed and how these enforcement powers will be used;
•    advise large retailers and suppliers on the Groceries Code;
•    report annually on his or her work; and
•    recommend changes to the Groceries Code.

How the Adjudicator will be funded and supervised

The Adjudicator will be funded by a levy to be paid by the large retailers. The Secretary of State will also have the power to make grants or loans to the Adjudicator. This power will help ensure that the Adjudicator is adequately resourced to undertake his or her functions.

The Secretary of State will review the Adjudicator's performance every three years and will consider the effectiveness of the Adjudicator and whether the office should continue. The Secretary of State will also have the power to transfer the Adjudicator.s functions to a public body. This will give flexibility if a body which is more appropriate to carry out the functions is identified or established.

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