Warnings UK grocery regulation will increase prices

Posted by Isobel Drake on 22nd July 2008

British Retail Consortium (BRC) Director General, Stephen Robertson, has urged all politicians to seriously consider the impact of any grocery regulation, as the costs are ultimately borne by customers in the form of higher prices.

His comments, at the Conservative Party’s Economic Summit last week, were in response to proposed changes to legislation in the wake of the inquiry into competition within the British grocery sector. The changes could include the introduction of an ombudsman to monitor the retailers treatment of suppliers and determine whether it breaches the new code of conduct.

Mr Robertson, stressed a vibrant retail sector is the key to a successful UK. “Politicians of every hue and consumer groups need to understand that regulation always costs. Those costs will inevitably work through to higher prices,” he said. “New regulation must pass two tests. It must be the last resort and it must be properly targeted.

“Now is not the time for a multi-million pound supermarket-supplier ombudsman. It’s not a time for new taxes on empty business premises, supplementary business rates or huge increases in the national minimum wage,” he warned.

Mr Robertson believes there are a few other issues the government should be attending to before even considering the introduction of an ombudsman. “It is the time to push for an end to protectionist EU import tariffs and excessive credit and debit card charges,” he proclaimed. “It’s essential that retailers are not distracted from their key task of serving customers by being burdened with more regulations, regulators, initiatives and codes.”

Retailers have been reluctant to support the introduction of an ombudsman, with Sainsbury’s among those to claim it will increase prices. However, Tesco, the market leader in the UK, has now indicated they may support the proposal.

In Australia, meanwhile, the report into the state of competition in the grocery industry is due to be released by the ACCC at the end of the month and a number of changes to legislation are likely to be recommended by the competition watchdog.