Grocery market report: latest proposals published

18 February, 2008

Supermarkets could be expected to sign up to a code of practice to improve their relationships with suppliers under proposals put forward by the Competition Commission.

In the provisional decisions on remedies - the Commission’s latest document to be released as part of its report into the grocery market - it also recommended employing an independent ombudsman to oversee and enforce the so-called Groceries Supply Code of Practice.

Under the terms of the code, the ombudsman will have the power to intervene in disagreements between supermarkets and their suppliers, who often claim they are forced to swallow costs when supermarkets run price-cutting promotions.

Other recommendations put forward include introducing a “competition test” in the planning procedure for large stores to ensure one company does not have the monopoly in one area.

The proposals, released on Friday, drew a number of comments from trade representatives.

The British Retail Consortium's director general Stephen Robertson said the proposals were "peripheral" and would not lead to much change.

He said: "This is the third major investigation into the sector since 2000. They are costly and time consuming. It’s time retailers were allowed to get on with delivering for customers.”

The Association of Convenience Stores chief executive, James Lowman agreed the reforms were weak, but disagreed that supermarkets should be allowed to continue in the same way.

"There is a very real problem in this market and the measures recommended go nowhere near far enough," he said.

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