Measures to grant the Groceries Code Adjudicator (GCA) powers to fine UK supermarkets have been laid in Parliament, Liberal Democrat Business Secretary Vince Cable has announced.

The Adjudicator will be able to impose penalties on large retailers of up to one per cent of a companies’ annual UK turnover, dependant on the seriousness of the breach of the Code.

It comes despite Tory opposition to grant the watchdog the powers it needed to do its job.

The GCA has published guidance on the principles that will be used to calculate the level of any fine. The Code imposes on the supermarkets an overarching principle of fair dealing with their direct suppliers, including farmers.

It includes specific provisions governing terms of supply, timing of payments, marketing and promotional costs, and payments as a condition of being a supplier.

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

The idea of an adjudicator first put forward by Colin Breed, then Lib Dem MP for South East Cornwall, in order to get a fair deal for farmers and suppliers. The idea has since been taken on by Andrew George, Chair of the Groceries Market Action Group, with the support of the rest of the Liberal Democrats in Cornwall and nationally.

The Coalition Government has now listened to calls from Andrew George, Stephen Gilbert and Dan Rogerson, as well as from other farmers, producers and interest groups, and given the Adjudicator more teeth to protect farmers and other small suppliers.

Lib Dem campaigner Julia Goldsworthy, Parliamentary candidate for Camborne, Redruth and Hayle, commented: "The recent crash in milk prices shows how important it is that our farmers and fisherman are protected from the determination of many supermarkets to set artificially low prices for their products. Everybody wants a cheap pint of milk but prices will skyrocket if farmers are driven out of business."

West Cornwall and Isles of Scilly MP Andrew George has Chaired the National Grocery Market Action Group since it was created in 2006 to (successfully) campaign to stop supermarkets abusing their market muscle. He said; “It’s great news for suppliers that the Liberal Democrats are now pressing ahead with the new fining regime. It is not before time. It’s a pity the Coalition partners have been dragging their feet. Having helped to set up the Grocery Adjudicator I welcome this positive step in the right direction.

“We’ve seen the latest dairy farming crisis, partly caused by the supermarkets’ treatment of their suppliers. Supermarkets treat farmers as if their supplies can be turned on and off like a tap”.

Stephen Gilbert, MP for St Austell and Newquay said: “All too often, our farmers get a raw deal from supermarkets engrossed in price wars with each other. I am delighted that the Liberal Democrat policy of a Grocery Code Adjudicator is to be put into place. This will help ensure that farmers get a fair deal.”

Cllr Simon Rix, prospective Lib Dem MP for Truro and Falmouth said: "Local farmers that I've spoken to are very worried about the increasing power of the big supermarkets. We have a plan to tackle this problem and I'm really pleased that this sensible, centre ground Lib Dem policy will now be implemented because making local producers bankrupt and importing food from afar would be madness.”

North Cornwall MP and Lib Dem Minister for Environment, Food and Rural Affairs Dan Rogerson said he was looking to at how to extend the remit of the Adjudicator to help dairy farmers. He said: “The Groceries Adjudicator was an idea first raised by former Cornish Lib Dem MP Colin Breed and seeks to better protect farmers from the giant supermarkets.

“Clearly, the system isn't currently working in the best interests of all dairy farmers, so whilst the ability for the Adjudicator to impose fines is a step in the right direction, I am also looking at how the Groceries Adjudicator can be reformed to further improve the relationship between dairy farmer and supply chain, including supermarkets.”

Liberal Democrat Business Secretary Vince Cable said: “The Groceries Code Adjudicator is a Liberal Democrat idea and was designed to make sure suppliers, such as farmers and small businesses, are given a fair deal by supermarket giants “Despite Tory opposition this important final step will give the GCA the power it needs to address the issues in the supply chain, between grocery retailers and their direct suppliers.

“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.”