A cross-party committee of MPs has suggested that currents plans to tackle supermarkets who treat their suppliers unfairly are not strict enough.
Government ministers plan to create an adjudicator to help settle disputes, however the cross-party committee believes it should also have the ability to impose fines.
The committee believes that more protection should be offered to those suppliers that may be reluctant to make a complaint against one of the major supermarkets.
The grocery industry has its own code of practice which was established to stop supermarkets from imposing unfair contractual terms on their suppliers by virtue of their size and power.
Smaller suppliers have complained for many years that their profits have been eroded by the purchasing power of supermarkets.
It is the responsibility of the Groceries Code Adjudicator (GCA) to investigate claims that the code of practice has been breached.
Under the draft legislation, the only sanction available to the GCA is to force supermarkets to publish the findings of any investigation. Ministers have said that they will only consider giving the GCA the ability to impose fines if this proves to be an inadequate deterrent.
Supermarkets will fund the cost of the new body after the cross-party committee dismissed claims that the ‘onerous’ cost would need to be met by consumers.
Peter Kendall, who is the president of the National Farmers Union, supports this position. He argues that the adjudicator’s office will cost around £1 million which is significantly lower the £2 billion profit which was made last year by Tesco.
Kendall hopes that the government will give more powers to the regulator. He believes that if we fail to offer adequate protection to suppliers, over time this will impact on research and investment and lead to the failure of many businesses.