UK competition watchdog still keen on grocery Ombudsman
The Competition Commission (CC), the UK’s competitive watchdog, is consulting with industry to establish an Ombudsman to arbitrate on disputes between retailers and suppliers and investigate complaints under the new Groceries Supply Code of Practice (GSCOP) introduced this year.
The Ombudsman and Code of Practice were both recommendations coming out of the CC’s inquiry into the competitiveness of the grocery sector, which was completed last year.
The CC does not have the power to establish an Ombudsman itself, so the plan requires the agreement of retailers, which appears unlikely as major chains and the industry body the British Retail Consortium have both indicated resistance to the plan. If retailers do not sign up to the Undertakings, then the Commission will recommend to the Department for Business Enterprise and Regulatory Reform that it takes steps to establish the Ombudsman instead.
The inquiry highlighted shortcomings in the sector that needed to be addressed, according to Peter Freeman, Commission Chairman and Chairman of the Groceries Inquiry.
“Our report last year uncovered significant evidence of problems in the way retailers deal with their suppliers, which, if left unchecked, will ultimately harm consumers’ interests,” he advised. “We remain convinced, as we were then, that a more robust system to tackle some of these practices and resolve disputes is essential.”
“Whilst the strengthened Code of Practice is a major step in the right direction, we believe that the creation of an independent Ombudsman is necessary to restore confidence amongst suppliers that there is an objective person looking into disputes and complaints. It is in everyone’s interests to have a system in place in which all parties can have faith,” he added.
Mr Freeman suggested that companies that companies that dealt with suppliers fairly would have no cause for concern by the introduction of an Ombudsman.
“Retailers with good relationships with their suppliers have nothing to fear from this and we think that the modest costs involved would be more than justified in tackling an issue that has clouded the industry for several years now,” he said. “The difficult economic circumstances at present would seem to underline the need for an Ombudsman, rather than remove it.”
The Commission also published a draft order outlining measures to prevent exclusivity arrangements and restrictive covenants being used by grocery retailers to restrict entry by competitors in order to improve competition in local areas. Additionally, they are looking at developing a ‘competition test‘ to ensure that retailers cannot build new supermarkets in regions where they already have a high market share.
