Government urged to set up retail ombudsman

4 August 2009

5 August 2009 | Jake Kanter

The Competition Commission (CC) has called on the government to establish a regulator to oversee supermarket supplier relationships.

The competition watchdog made the recommendation to the Department for Business, Innovation and Skills (BIS) after supermarkets with a turnover of more than £1 billion failed to agree to the scheme on a voluntary basis.

The CC wants to put in place an ombudsman to help arbitrate disputes between retailers and vendors.

It published the final version of its strengthened Groceries Supply Code of Practice (GSCOP) yesterday. It follows a two-year investigation that ended in April 2008. During the consultation period after the report retailers - including Asda, Morrisons, Sainsbury's and Tesco - opposed the idea of an ombudsman.

CC chairman Peter Freeman said while some retailers recognised the problems, the "majority" did not. "We made every effort to persuade retailers of our case because 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 practice and recommend that BIS set up the ombudsman."

The commission wants the Office of Fair Trading to appoint an ombudsman, and estimates a regulator would cost £5 million a year (for which it recommends retailers collect the tab).

A spokesman for the BIS said the issue was "complex" and it would consider the CC's findings carefully and respond in "due course".

Peter Kendall, president of the National Farmers' Union, said: "The new code will only work if it is proactively and robustly enforced so the climate of fear that suppliers endure can be eliminated. This can only be achieved through an ombudsman."

The British Retail Consortium labelled the plans a "multi-million pound bureaucracy" that would push up costs for consumers.


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