Large retailers face financial penalties if they treat suppliers badly under new laws introduced in Parliament today.
A new Groceries Code Adjudicator will be given powers to fine supermarkets if they act unfairly such as forcing down wholesale prices of food and drink to below-cost levels. Offenders will also be publicly 'named'.
Competition minister Jo Swinson said: "The food industry plays an important role in economic growth, and the Groceries Code Adjudicator will help to ensure that the market is operating in a fair and healthy way. Large supermarkets form a big chunk of this industry, and generally provide consumers with low prices and variety whilst providing business for farmers and suppliers.
"But 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."
According to the Telegraph, trade groups representing supermarkets are expected to warn that the changes will increase prices for consumers.
The Adjudicator will publish guidance within six months after the Bill comes into effect to propose the maximum amount he or she will be able to fine. Retailers would have a full right of appeal against any fines imposed.