UK supermarkets have criticised proposals for a new Groceries Supply Code of Practice and the formation of an ombudsman set out by the Competition Commission, claiming that it could cost the industry millions of pounds.
The British Retail Consortium (BRC) has urged the government not to introduce legislation that would hamper healthy competition and add to costs.
The trade association has slammed the creation of an ombudsman and stressed that the commission can only recommend the supplier code to those who deal directly with supermarkets.
BRC director Stephen Robertson said: “This is unjustifiable pandering to supplier pressure groups. The commission has not produced any evidence to show systematic failure in supermarkets’ relationships with suppliers…
“With retailers battling to keep food prices down, this is entirely the wrong time to be thinking about introducing a pointless new multi-million pound quango."
Sir Terry Leahy, who heads up UK supermarket giant Tesco, warned that some of the recommendations were not in line with consumer needs or those of the industry.
He said: “We are not sure that the main recommendations will improve the life of the British consumer. We welcome the broadening of the supplier code, but we share the concerns... that an ombudsman would be counter-productive and would reduce the benefits of competition.”
Asda chief executive Andy Bond insisted that any changes to how the market works should help retailers to lower prices to benefit consumers.
He said: “While we welcome its proposals to improve local competition and improve the relationship between retailers and suppliers, the bottom line is that any changes to how the market works must help us to lower prices and deliver an even better deal for customers.
“The Competition Commission’s proposals on the new code and an ombudsman could cost the industry hundreds of millions, leading to higher prices for customers, which will hit families hard at a time when they are already feeling the pinch.
“We strongly believe that the ombudsman should act as a mediator to resolve disputes rather than diving straight into binding arbitration, and should remain focused on the interests of the consumer.”
Sainsbury’s has welcomed the new Grocery Suppliers’ Code Of Practice but, in its statement, it criticised proposals for an independent body to oversee buyer-supplier relationships.
It said: “We believe that the creation of an ombudsman to look into aspects of relationships between suppliers and grocery retailers is an unnecessary measure and that any issues should be addressed through the proposed changes to the existing code of practice.”
The Association of Convenience Stores (ACS), which represents 33,000 local shops across the UK, accused the Competition Commission of failing to support choice and diversity in the UK grocery market.
ACS chief executive James Lowman said: “The over-riding failing of this inquiry is that the commission views competition in the grocery market as competition between the big four retailers…
“We are concerned that the commission is far from decisive in setting up the ombudsman. There is much left unresolved in the appointment and funding of an ombudsman. We are very concerned that what follows is a long period of legal wrangling that means that no new regulation will be in place for some time to come.”
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