08 May 2008 | Jake Kanter
The Competition Commission (CC) is to press ahead with plans for a regulator for supermarket supplier relationships, despite protests from retailers.
The new Groceries Supply Code of Practice, published last week as part of the CC's final report into the sector, will replace the existing Supermarket Code of Practice and provide increased protection for suppliers (News, 28 February).
The changes will affect retailers with a turnover of more than £1 billion. The ombudsman will mediate disputes and investigate retailers' records if suppliers complain about them. Retailers will also have to establish an in-house compliance officer to help enforce the code.
The idea has been heavily criticised by the supermarkets (News, 24 April). But the CC will need co-operation from them to establish the ombudsman. If an agreement is not reached, the CC will turn to the Department for Business Enterprise and Regulatory Reform to help impose the regulator.
The scheme remains unpopular among three of the big four supermarkets. Sir Terry Leahy, chief executive of Tesco, said in a statement: "An ombudsman would be counter-productive and would reduce the benefits of competition."
Asda said the figure could cost the industry "hundreds of millions" of pounds and lead to higher prices for consumers, while Sainsbury's stressed it was "unnecessary". Morrison's didn't comment on the ombudsman, but stated it "always deals with suppliers fairly".
Peter Freeman, chairman of the CC, said retailers with good practices and relationships have nothing to fear. "We think that it would be in everyone's interest that a code governing retailers and suppliers enjoys the confidence of all those involved."