Measures that will grant the Groceries Code Adjudicator (GCA) the power to fine UK supermarkets that have breached the Groceries Code have been laid in Parliament.

The Adjudicator will be able to impose penalties on the large supermarkets of up to 1% of their annual UK turnover, dependant on the seriousness of the breach. The GCA has published guidance on the principles that will be used to calculate the level of any fine.

These new measures will sit alongside existing powers to issue supermarkets with recommendations as to their future conduct, and to ‘name and shame’ those that have breached the code.

The code imposes on the supermarkets an over-arching principle of fair dealing with their direct suppliers; and includes, amongst other things, specific provisions governing terms of supply, timing of payments, marketing and promotional costs, and payments as a condition of being a supplier. The code does not govern issues relating to pricing.

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 (29 January 2015) 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 10 largest supermarkets and their direct suppliers of food, drinks, and a range of household products.

Though the NFU welcomed the announcement on Thursday, the union warned that more needs to be done to protect those farmers and growers not covered within the remit of the Grocery Code. These individuals are not direct suppliers to retailers and, therefore, still not protected from unfair trading practices from intermediaries.

NFU food chain adviser Tom Lander said, "Like any professional business owner, farmers want to operate in a transparent and fair market place. This can only occur in a trading environment governed by fair rules and procedures that address imbalances of power in the supply chain.

"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."