Pressure is building on the Competition Commission (CC)’s investigation into the grocery market with MPs calling for a watchdog and a new survey showing a staggering level of fear among suppliers.

A report published on August 25 by Grant Thornton’s food agribusiness recovery group revealed that 52 per cent of the UK's food suppliers to supermarkets are unfamiliar with the provisions of the Office of Fair Trading's supermarket code of practice and among those that are, 76 per cent don't believe it offers any protection from the increasing power of supermarkets and the financial effects this is having on suppliers. Some 52 per cent of the respondents believe the code is not enforceable because it does not encourage suppliers to raise a formal complaint against supermarkets for fear of losing their supply contract.

“And what is surprising is the extent of the fear factor,” said Duncan Swift, head of the group at Grant Thornton that prepared the report. “Of the 1,500 suppliers we contacted, only 50 were prepared to respond and the vast majority didn’t want any risk of being identified,” he told freshinfo. “The CC says maybe there is a fear factor at play; well this shows that, categorically, there is.” He added that in other industry sectors a 10-15 per cent response rate is average, whereas this survey gleaned barely a three per cent rate. “If everything really were rosy in the garden, then this sector would be no different to others and people would be happy to come forward, but clearly they aren’t.”

The full report has been submitted to the CC along with other evidence encountered by Grant Thornton in its dealings with clients. “The commission has said so far they it lacks supplier evidence, well this is it,” said Swift.

He is concerned that when the commission finally reports, nothing will change. “That would spell more of the same: more and more examples of what we are already seeing and that is supplier financial distress caused by supermarket conduct that is in the territory of misconduct,” said Swift. “And if the regulators choose not to bring their weight to bear to get them to clean up their act, then things will only get dirtier.”

Grant Thornton believes action is needed to make the whole process of supermarket dealings with suppliers more visible. “It doesn’t have to be a contract, just an e-mail with 10 bullet points so that anyone can see what has been agreed between the two parties would do,” said Swift. “This is what we have proposed ourselves. What is loud and clear is that the UK food supply chain is desperate for reform.”

Asda does not agree. “As we've said all along we have nothing to hide, and more importantly we're proud of the relationships we have with suppliers both large and small,” a spokesman told freshinfo. “We don't feel another regulator in addition to all the ones we already have is either necessary or desirable. Either way, we will continue to act in line with the code, adhering to both the letter of it and in the spirit of it.”

But a new group formed this week by seven MPs and a coalition of 16 NGOs and trade associations including the NFU, Banana Link and the Association of Convenience Stores dubbed the Cross Cutting Remedies Group, is calling for a watchdog with legal powers to regulate the multiples and their dealings with suppliers. “Regulators need to make a judgment on when influence in the marketplace alters from successful use of market power to unacceptable abuse of it,” said Andrew George, the Liberal Democrat MP who created the group.

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