01 November 2007
The Competition Commission should crack down on the increasing numbers of buyers who are using their weight to "squeeze suppliers" and break terms of contract.
Jim Bradley, an associate at emw law, said some buyers are forcing suppliers to accept unsold merchandise, leaving them liable for returned stock worth millions of pounds.
He added the most unscrupulous buyers will deliberately over-order to corner the market in a given item, knowing they can return unsold goods. For instance, a supermarket may place an excessive order for charcoal or alcohol over a summer weekend and then return unsold stock to the supplier.
While contractual terms may ban the retailer from returning unsold goods, a retailer can leave invoices unpaid to force suppliers into accepting the practice, said Bradley.
Given the retailers' "powerful bargaining position", he believes it will take time to stamp out the practice. But, he said, recognition by the Competition Commission that buyers are breaking the law would be a strong deterrent.
Such a move may open the way for legal action by the Consumers Association, which could force retailers to pay out millions of pounds in legal settlements.
The Competition Commission's preliminary report into anti-competitive behaviour in the grocery sector is due to be published in the next few weeks. A spokesman refused to divulge any of its findings ahead of the report and said the exact date of publication had not yet been agreed.
But, said Bradley, the commission appeared more determined to crack down on anti-competitive practices.