Suppliers accuse retailers of ‘bully-boy tactics’

4 February 2010

4 February 2010 | Gareth Mytton

The National Farmers Union (NFU) has accused retailers of demanding changes to trading and payment terms with suppliers just days before a new code of conduct designed to aid relations was established.

NFU president Peter Kendall said retailers had launched “pre-emptive strikes” to circumvent the code, which came into force today. He added they had used “nothing but bully-boy tactics” towards suppliers.

Kendall said: “This week should have been marked by a sea change in grocery supply chain relationships with our farmer and grower members. But instead in the past 10 days I have heard how suppliers to major retailers have faced some of the most unreasonable demands for retrospective payments and changes to trading terms that we’ve ever seen.”

Stephen Robertson, director-general of the British Retail Consortium (BRC) said retailers accepted their responsibilities towards suppliers. “The time and money retailers are putting into demonstrating they meet the code’s requirements and informing suppliers shows they accept their responsibilities as major players in the supply chain,” he said.

The code applies to retailers with an annual grocery turnover of more than £1 billion. It will be regulated by the Office of Fair Trading (OFT) and will prevent supermarkets from making unreasonable demands of vendors, gives suppliers the right to apply for independent arbitration to investigate grievances and requires retailers to appoint a compliance officer directly responsible for the code and reporting to the OFT.

The Competition Commission published the strengthened code last year after an investigation into the supermarket sector.

Last month, consumer minister Kevin Brennan announced the government would follow the commission’s recommendation to set up a retail ombudsman to enforce the code. A consultation on the ombudsman role begins tomorrow.

But the BRC argued the new code went far enough already. “Politicians of all parties need to recognise that these strong and wide-ranging new rules make an ombudsman unnecessary,” Robertson said.

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