A new supermarket watchdog should be given the power to fine the food giants for unfair treatment of suppliers, a parliamentary committee has said.
The Government is committed to introducing legislation to create an Adjudicator to investigate alleged breaches of the grocery industry Code of Practice, which came into force last year.
But the only sanction in the watchdog's armoury will initially be the power to require stores to publish the results of his investigations. Only if this proves an insufficient deterrent will ministers consider granting him the power to impose fines.
The report by the cross-party Commons Business Committee said financial penalties should be available from day one.
"We disagree with the Government on the introduction of fines," said committee chairman Adrian Bailey. "We propose that fines be an available penalty from the start, not least so that the Adjudicator's performance can be judged on the basis of a full package of remedies."
The code was drawn up in response to complaints that supermarkets were using their dominant position in the food market to impose unfair terms on suppliers. It bans supermarkets with an annual food turnover of £1 billion or more from passing on excessive costs to suppliers or changing their terms without notice.
Suppliers are thought to have seen their profit margins hit as the supermarkets pass on the cost of price-cutting promotions to them, but many are reluctant to complain for fear of losing access to customers for their products.
The report welcomed the creation of the new watchdog and urged the Government to press ahead with legislation in a Groceries Code Adjudicator Bill, published in draft form in May.
Business minister Edward Davey said:"I welcome this publication. The Government is committed to establishing a Groceries Code Adjudicator and this report from the Business Innovation and Skills Select Committee will help us to present a strong Bill to Parliament.
"I will carefully consider their recommendations and respond to them in full."