Competition minister Jo Swinson announced on Tuesday (4th December) that, in response to calls from farming groups and anti-poverty organisations, the supermarket ombudsperson will be licensed to fine supermarkets found to be abusing their position of power. The adjudicator will observe the behaviour of the ten UK retailers whose turnover is over £1 billion.

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A shadow adjudicator could be instated as early as mid-2013 to police supply chain relationships between the country's major retailers and their suppliers.

On Tuesday, MPs moved to support calls by stakeholders to give the adjudicator power to give financial penalties as well as merely 'naming and shaming' companies violating the GSCOP. MPs amended the adjudicator bill, which is currently passing through Parliament, amidst fears that aggressive lobbying by retailers had succeeded in diluting the upcoming legislation. Producers' groups argued that fewer powers would have left the watchdog toothless and unable to react to abuses.

Jo Swinson said on Tuesday, "The Groceries Code Adjudicator will help to ensure that the market is operating in a fair and healthy way. Where supermarkets are breaking the rules with suppliers and treating them unfairly, the Adjudicator will make sure that they are held to account. We have heard the views of the stakeholders who were keen to give the Adjudicator a power to fine, and recognise that this change would give the Adjudicator more teeth to enforce the Groceries Code.

"We expect fines to be used as a last resort, but the fact that the Adjudicator has the power to impose them will send a strong message to retailers that compliance with the Code is not optional. I am confident that these changes will mean that the Adjudicator is able to ensure fair play in the food supply chain and keep the industry growing."

However, although the government has agreed to give the watchdog power to administer fines, the severity of financial penalties is yet to be decided. Once in position, the ombudsperson will have to propose a maximum amount they will be able to fine retailers. Fines are likely to be based on comparable bodies such as the Office of Fair Trading, which can inflict penalties of several million pounds.

Melanie Ward, spokesperson for ActionAid, an anti-poverty organisation, commented after the bill's second reading last month, "Only with the ability to hit big supermarkets where it hurts - their profit margins - will the watchdog be able to protect vulnerable farmers and producers around the world from being treated unfairly."

Politicians had previously said the desire to avoid negative publicity as the result of a 'name and shame' campaign would be sufficient to ensure supermarkets comply with the GSCOP in the cut-throat groceries sector. However, producers and anti-poverty campaigners disagree; they maintain that the threat of fines is the only way to ensure supermarkets do not pass on excessive business risks and costs to their suppliers.

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