Time For Everyone To Play Fair

The Competition Commission has made formal recommendations for the government to establish an ombudsman to rule dispute between supermarkets and suppliers after supermarkets failed to come to a voluntary arrangement, as well as a strengthened code of conduct.

The new measures follow the Commission’s two year investigation into the supermarket industry, which ended in April last year.

After extensive consultation since, Marks and Spencer, Waitrose and Aldi backed the creation of an ombudsman, but other retailers opposed it saying it created ‘red tape’.

Competition Commission’s Peter Freeman said: “We made every effort to persuade retailers of our case as it would be the quickest way to establish the ombudsman.
 
“We are now left with no alternative but to set out the new code of practise and recommend the Department for Business, Innovation and Skills, set up the ombudsman,” he added.

Everyone Must Behave Fairly

It’s thought the ombudsman will cost £5 million to run each year, and will prevent supermarkets from making adjustments to existing terms and conditions with suppliers, and require them to enter a binding settlement to resolve any dispute with a supplier.

British Retail Consortium (BRC) said that the Business Secretary should refuse the proposal as customers will be the ones to lose out.

The BRC’s Andrew Opie said: “This should be about customers. The last thing needed at any time, let alone in a recession, is a multi-million-pound bureaucracy, unnecessarily piling on costs and pushing up shop prices.”

The president of the National Farmers Union, Peter Kendall, said that farmers and other small businesses welcomed the move.

He said: “There are a lot of underhand practices going on and we want someone to make them behave fairly.”

Swift Action Must Be Taken

There have been many suggestions over the years that supermarkets use their power to take advantage of small suppliers, and the Commission found that some are taking advantage, such as when a product is stolen, the cost is often borne by the supplier.

Promoter of fair trade, Traidcraft, said the new code would not protect small suppliers unless there was an ombudsman to enforce it:  “Nothing in the history of the supermarkets suggests they will be any more willing to apply this code than its predecessor. In fact, in the recession the situation has worsened, with suppliers coming under increased pressure,” said Fiona Gooch, from Traidcraft.

“It is crucial the government acts swiftly to establish an independent ombudsman to stem unfair practices and help the grocery sector return to being a fair market,” she added.

What Do You Think?

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