19 October 2007 | Paul Snell
The Competition Commission (CC) should be investigating retailers who force suppliers to take back unsold stock, a law firm has said.
Commercial lawyers emw law said the practice where major retailers compel suppliers to take back unsold goods is increasing, even though suppliers are often not obliged to do so.
The firm said many retailers extend their payment terms to force suppliers to take back unwanted stock - if they do not, payment is withheld.
In a statement Jim Bradley, competition law specialist at emw law, said: "The competition authorities urgently need to target this new squeeze on suppliers. Suppliers simply cannot afford not to have invoices paid and so the retailer is effectively controlling the market, limiting investment and innovation by suppliers and passing all the risk back onto them."
He added retailers often deliberately over-order at short notice to ensure suppliers cannot supply elsewhere, helping the retailer to corner the market. "This could distort competition for other retailers in the local area if they are prevented from having access to those goods on favourable terms," said Bradley.
"The CC and the Office of Fair Trading need to keep a sharp look out for this kind of anti-competitive behaviour so they can take action on suppliers' behalf."