The long-awaited review of the supermarket code of practice carried out by the Office of Fair Trading (OFT) and published last week has shown that the code is not working.
The conclusion drawn by the 55-page report is that further investigation into supermarket compliance is necessary which will involve a focused compliance audit.
The report consulted with suppliers and their trade associations as well as the four leading multiples bound by the code: Asda, Safeway, Sainsbury’s and Tesco. More than 80 per cent of those consulted said the code had failed to bring about any change in supermarket behaviour. The review found a climate of fear persists among suppliers with almost three-quarters of those consulted admitting to being too fearful to complain.
The supermarkets expressed commitment to the code but the report found their relationships with suppliers had not changed since it was introduced.
The supermarkets all argued that this is because the protocols merely codify their already good practice.
But other supermarkets not covered by the code were not so sure. Waitrose was consulted by the OFT and found the code heavily weighted in favour of buyers and lacking enforcement mechanisms.
The findings have come as no surprise to Fresh Produce Consortium (FPC) chief executive Doug Henderson. “Our opinion is that the supermarket code as constituted does not work,” he said. “Many of the provisions are not relevant to fresh produce. We want the sector to manage relationships between suppliers and supermarkets rather than bringing in external auditors. We would prefer the proper mechanisms to allow that to happen within the industry rather than have government intervention.” To this end the FPC has been working with a broad range of retailers and suppliers to devise its own code of practice for the fresh produce sector. “There is clearly a lot of good practice between supermarkets and the supply chain and we wish to build on that,” said Henderson.
He also disputed the assertion that fear dominates dealings between suppliers and their multiple customers. “Suppliers will be very reluctant to criticise their customers in a public forum,” he said. “That is not a climate of fear it is something people just don’t do.”
For example, Asda, which has often been the target of pressure group criticism in regard to its supplier relationships, vigorously defended its position to freshinfo this week.
“Our view is that our relationships with our suppliers are very strong. Produce has really led the way and is an area of which we are most proud,” a spokesman told the Journal. “We can point to initiatives such as our Cost-plus contracts on potatoes which show our commitment to our suppliers. “
The OFT consulted with three trade associations in the arena of produce and one supplier. They expressed concerns regarding alleged breaches of seven of the 25 clauses in the code compared to three in the eggs sector and 19 in the packaged foods sector.
Claims of breaches were most frequent in clauses regarding payment times, retrospective price reductions, contributions to marketing costs, lump sum payments, payments in respect of consumer complaints and tying of third party goods or services.
The OFT’s compliance audit will focus on these areas and is due for publication by year-end.
There is no timetable for the FPC code.
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