UK supermarkets to be penalised by industry regulator for mistreating suppliers

With the industry watchdog being handed powers to penalise firms financially, major supermarkets could face multimillion-pound fines if found guilty of mistreating suppliers, The Guardian reported.

The Treasury had been accused of dragging its feet over the question of fines after a Groceries Code Adjudicator, tasked with policing relationships between retailers and suppliers, was appointed two years ago, following years of investigations into the conduct of the big supermarkets.

The new powers could be enforceable as early as mid-March.

The code would apply to the 10 UK retailers with a turnover in the groceries market exceeding £1 billion.

According to the Department for Business, Innovation and Skills, the adjudicator would be able to impose penalties on the large supermarkets of up to 1 per cent of their annual UK turnover, depending on the seriousness of the breach.

Only days earlier MPs on the environment and rural affairs select committee had called for the extension of the code to dairy farmers and other small-scale producers, following concerns over the treatment of milk suppliers by the major supermarkets.

The move would also benefit farmers, who would now get more protection if they were not treated fairly.

According to business secretary Vince Cable, the toughened powers, set out in new measure laid in parliament gave the Groceries Code Adjudicator (GCA) ''all the tools it needs'' to ensure a fair deal between supermarkets and those who supplied them, such as farmers and small businesses.

The measures would sit alongside existing powers to issue supermarkets with recommendations about their future conduct and to ''name and shame'' those who had breached the code.