A 25 per cent market share limit on supermarkets could help tackle supply chain failures and unfair trading practises according to a new report from charity Sustain.
The NGO, which represents around 100 industry organisations, recommended that the government intervene to “protect small scale farmers and workers against powerful buyers” in its Super Market Failure report.
Sustain accused supermarkets of resisting further regulation on supply chain practises, adding it was “disappointed” with the low level of response to its supermarket supply chain survey, with only Waitrose and M&S responding to their inquiry.
The report became public shortly before the Groceries Code Adjudicator Christine Tacon mandated “major changes” in the Co-op’s supply practises following “widespread” failings in compliance with the Code.
Sustain also investigated retail commitments to paying living wages, pointing out that the average paid workers earned up to 339 times less than the highest paid UK supermarket executives.
The report described retailers as having a “long way to go” on paying the real Living Wage, with only Lidl publicly committed to paying its workers living wage.
Vicki Hird, sustainable farming campaign coordinator, who conducted the research, said: 'Workers in the food system deserve to be paid what they need to live a decent life and farmers too need to be rewarded for producing sustainable, safe food. But our research suggests that the UK retail sector is still far from delivering a fair system.
'We need strong government action on fair dealing in supply chains and to promote more diverse retail outlets locally. Wecall on the retailers to commit to paying the real Living Wage for all workers including agency, narrowing the pay gap, and dealing fairlywith suppliers both here and overseas.'
Citing the need to curb unfair trading practises in the supply chain, Sustain’s report stated: “Possible recommendations could be to cap grocery market dominance at 25 per cent, or to introduce a more stringent public interest test into merger tests.”
The cap would put Tesco in breach of market size, which has 27 per cent market share, while Sainsbury’s merger proposal with Asda would also create an oversized competitor at over 30 per cent.
In one of its most damning paragraphs, the report states: “We have been heading for some time in the wrong direction with this centralised and increasingly globalised model of food retail where consumers and suppliers are led very much into being choice and price takers and the retailers gain a considerable profit at citizens’, farmers’ and the planet’s expense.”
Sustain also touted the idea of bringing the new EU directive on unfair trading practises (UTP) in business-to-business relations into UK law.
“The new Directive defines 15 practices that qualify as UTPs and are therefore outlawed and it would not be difficult to combine the wider reach of this new regulation with the UK’s current Code and GCA remit.”
