UK Opposition looking at ways to curb supermarket power

Posted by Daniel Palmer on 7th January 2010

The UK’s Conservative Party has pledged to set up a supermarket ombudsman in a bid to curb and outlaw abuses of power and unacceptable practices by retailers.

Speaking at the Oxford Farming Conference, Shadow Environment Secretary, Nick Herbert said a future Conservative government will create a ombudsman as a dedicated unit in the Office of Fair Trading.

“Supermarkets deliver real benefits but some aspects of the way they treat their suppliers can harm consumers as well as producers,” Herbert said. “We have a new code of practice which outlaws unacceptable practices such as retrospective discounting, but this isn’t worth the paper it is written on without effective enforcement.”

He added that, while the current government “dithers”, the Conservatives are “clear”.

“We will introduce an ombudsman to curb abuses of power which undermine our farmers and act against the long-term interest of consumers. As the Competition Commission has made clear, failure to do so could result in reduced investment by suppliers, lower product quality, and less product choice, with potentially higher prices in the long run. It is time to act,” Herbert insisted.

However, retailers seem unimpressed with the Tory proposals. Andrew Opie, food director of the British Retail Consortium said an ombudsman could push prices for consumers.

“The last thing they need is a new multi-million pound bureaucracy – unnecessarily piling on costs and pushing up shop prices,” Opie said. “Very few farmers deal directly with retailers. Most supermarket suppliers are multi-national food businesses perfectly able to stand up for themselves. Retailers are right to defend customers’ interests by negotiating robustly with them.”

Opie added that the BRC had seen no evidence to support claims that retailers are unfairly putting the squeeze on their suppliers.

“There is already a supplier code, overseen by the Office of Fair Trading, which has long been compulsory for the ‘big four’ supermarkets and is about to be extended to more retailers.”

UK retailer Asda said it would not support proposals that lead to price increases during tough times for customers

“Asda, with its roots in dairy farming, is well known in the farming industry for the fair way it treats its agricultural partners,” a spokesperson told just-food.

The Tories, however, have criticised the government for “devaluing” British agriculture and the National Farmers Union welcomed the Opposition’s support for an ombudsman.

NFU president Peter Kendall said the creation of a supermarket ombudsman should be a priority for any government which has consumers’ best interests at heart.

“It is pleasing that the Conservatives have taken note of a policy that will deliver for consumers and food suppliers alike,” Kendall said.

“The abuse of market power by retailers damages farmers’ ability to innovate and invest which, in turn, leads to a reduction in choice and availability for consumers. We have always said that an ombudsman would need to provide proactive and robust enforcement of the code of practice as well as protection of anonymity for suppliers to eliminate the climate of fear that currently exists.”

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