Britain to give grocery industry watchdog more power

[January 29, 2015]  LONDON (Reuters) - Britain's government plans to give the grocery industry watchdog powers to fine UK supermarkets if they fail to treat their suppliers, including farmers, fairly.

Measures before Parliament will grant the Groceries Code Adjudicator (GCA) the power to impose penalties on large retailers of up to 1 percent of their annual UK turnover, dependent on the seriousness of the breach of its rules.

The government believes the proposed measures will become law before the May 7 general election.

The spotlight on supermarkets' relationship with suppliers intensified last year after a 263 million pounds ($398 million) accounting scandal at Tesco <TSCO.L>, Britain's biggest retailer, caused by booking deals with suppliers too early.

The GCA 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.

The code sets out specific provisions governing terms of supply, timing of payments, marketing and promotional costs, and payments as a condition of being a supplier. It does not, however, govern issues relating to price.

The proposed new measures will add to the GCA's existing powers to issue supermarkets with recommendations as to their future conduct, and to "name and shame" those that have breached the Code.

"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," said business minister Vince Cable.

(Reporting by James Davey; editing by Susan Thomas)

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