The Office of Fair Trading has invited the NFU, on a confidential basis, to build up and submit a dossier of alleged breaches of the OFT Code of Practice for supermarkets and their suppliers.
On behalf of it’s members that are direct suppliers to the relevant supermarkets - Asda, Sainsbury’s, Tesco and Morrisons, the farmers’ union has until May 16 to collect information to form part of the OFT’s continual monitoring of the Code. Members who do not have direct trading relationships but have a view on the Code and its operation and the effects of unfair treatment have on their businesses in extended chains are also being invited to comment on some of the more general issues.
NFU food chain adviser Emma Holyfield has compiled a list of 11 questions for members to consider when making a submission. They are:
1. Please comment as to whether, in your own experience, the audit portrays an authentic picture of the dealings between supermarkets and their suppliers in the light of the requirements of the Code.
2. Can you provide further information and evidence as to the level of compliance to the Code by the supermarkets that you supply?
3. Do you have specific and current evidence on whether the practices, which are prohibited by the Code continue?
4. Do you have specific and current evidence on whether other practices about which the Competition Commission (CC report 2000) made adverse findings but which are not covered by the Code also continue?
5. Do you have specific and current evidence whether there are any other practices, which adversely affect competition?
6. Do you have any specific or current evidence on the adverse effects on competition of the continuation of any of the practices above (questions 3, 4 and 5)?
7. Do you have any information or evidence to suggest, that the competitive relationship between supermarkets and their suppliers has had an adverse effect on consumer value and choice?
8. The structure of the UK grocery industry has altered in recent years, such as the continuing expansion of Tescos, Morrisons takeover of Safeway and convenience store acquisitions by large supermarkets. Do you have evidence or views on the practical effect of these structural developments, on competition between grocery retailers and competition between suppliers to compete for the business of grocery retailers?
9. Do you have any information on the cost of entry to the convenience store sector, and the extent to which it has been affected by the entry into the sector of the supermarkets?
10.‘The 2000 Competition Commission Report found that below-cost selling and price flexing operated against the public interest, but made no recommendations for remedies on the grounds of practicality and proportionality, bearing in mind that low prices are generally good for consumers.’
10a. Do you have any evidence on the current nature and prevalence of the practices of below-cost selling and price flexing?
10b. Do you have any evidence on any adverse effects of below-cost selling and price flexing on competition?
10c. Do you believe that current practices of below-cost selling and price flexing are greater than they were at the time of the Competition Commission 2000 report?
10d. Do you have any potential remedies to the practices of below-cost selling and price flexing, bearing in mind the reasons as to why the Competition Commission did not put forward any remedies in 2000?
11. ‘The convenience stores sector has been placed under more competitive pressure through larger supermarkets’ entry into the sector’ Do you have any evidence to indicate that competition is now prevented, restricted or distorted, resulting in consumers being worse off as a result of increased competitive pressure?
If you are an NFU member and would like to respond to any of the points raised above, then please send your comments to Holyfield by May 16 on 020 7331 7237 or email emma.holyfield@nfu.org.uk.
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