Connect with us

Hi, what are you looking for?

Jewish Business News

Business

Sainsbury, Top UK Supermarkets May Face Fines over Violation of Groceries Code

Sainsbury's

 

British supermarkets that fail to abide by the U.K.’s Groceries Code may face fines in the near future.

UK Business Secretary Vince Cable on Thursday tabled measures in Parliament which will give the Groceries Code Adjudicator powers to fine supermarkets that breach the code in their relationships with their suppliers.

Under the plans, the adjudicator will be able to impose penalties on the UK’s biggest supermarkets, including listed supermarkets Tesco PLC, J Sainsbury PLC and Wm Morrison Supermarkets PLC, of up to 1% of their annual UK turnover.

The penalties depend on the seriousness of the breach of the code of conduct and the new measures will sit alongside existing powers to issue supermarkets with recommendations to improve their future conduct and to ‘name and shame’ companies that breach the code.

The code imposes on the supermarkets an over-arching principle of fair dealing with their direct suppliers and includes specific provisions governing terms of supply, timing of payments, marketing and promotional costs, and payments as a condition of being a supplier, according to the Department for Business, Innovation and Skills. The code does not govern issues relating to pricing, it added.

This important final step will give the Groceries Code Adjudicator the power it needs to address the most serious disputes between the large supermarkets and their direct suppliers, ” Cable said, according to the report.

The move comes after a report published earlier this month by insolvency specialist Begbies Traynor Group PLC found the escalating price war among big UK supermarkets and discounters has put many smaller food retailers and suppliers at risk of going under.

Small food retailers and suppliers have been the hardest-hit casualties of the ongoing price war among supermarkets in the UK, as Tesco, Sainsbury’s, Asda and Morrisons attempt to cope with the competition from discount retailers Aldi and Lidl. The supermarkets have been cutting prices and, as a result, have been squeezing suppliers’ margins and elongating payment terms.

Meanwhile, a report said Sainsbury’s topped the Financial Conduct Authority’s list of all short positions in UK listed companies that have been disclosed.

Sainsbury led the list with 10.6% of its shares out on loan.

The company has been dragged into the U.K. supermarket price war, and it is looks as if investors believe that the retailer won’t be able to hold its ground against the discounters, But unlike other companies, Sainsbury’s is not overvalued and there are few obvious reasons why short sellers would want to target the company.

Sainsbury’s currently trades at a forward P/E of 10.6, offers a yield of 4.7% and trades 20% below its net asset value, so for the time being there seems to be no obvious reason to avoid Sainsbury’s.

 

 

Click to comment

Newsletter

Advertisement

You May Also Like

World News

In the 15th Nov 2015 edition of Israel’s good news, the highlights include:   ·         A new Israeli treatment brings hope to relapsed leukemia...

Entertainment

The Movie The Professional is what made Natalie Portman a Lolita.

VC, Investments

You may not become a millionaire, but there is a lot to learn from George Soros.

Travel

After two decades without a rating system in Israel, at the end of 2012 an international tender for hotel rating was published.  Invited to place bids...

Advertisement