The result is “just wishful thinking” on the part of the Commission, says the fair trade organisation, Traidcraft.
Traidcraft has led the campaign for the establishment of a supermarket Ombudsman – recommended by the Commission following its own two-year inquiry into the grocery sector.
Now, the Commission is handing over responsibility for establishing the Ombudsman to the Department for Business, Innovation and Skills after all the supermarkets, except Waitrose, failed to voluntarily to sign up to the recommendation.
Fiona Gooch, Traidcraft’s Senior Policy Advisor, described the new code as a wasted opportunity.
“We welcome the overarching principle of fair dealing and the belated recognition that where supermarket suppliers are forced to act against their own interests this is a breach of the code,” she said.
“But there is no monitoring and no enforcement. Instead, responsibility for applying the code continues with the Office of Fair Trading who have had responsibility since 2001, since when many of the deficiencies in the current system have been identified.
“Without a referee to enforce the rules, this code is not only just wishful thinking on the part of the Commission, but is a waste of public money if the major recommendation from its own investigation is not implemented.
“Nothing in the history of the supermarkets suggests they will be any more willing to apply this code than its predecessor. In fact, in the recession the situation has worsened with suppliers coming under increased pressure.
“It is crucial the Government acts swiftly to establish an independent ombudsman to stem unfair practices and help the grocery sector return to being a fair market,” she said.
- ENDS -
Notes to Editors:
- The Competition Commission is charged with assessing how markets work and make recommendations in the best interests of consumers.
- Unfair practices by supermarkets towards suppliers such as retrospective changes to unit prices and demanding rebates without prior agreement, were exposed by the Commission, who received submissions about poor practices by Tesco, Asda, Sainsbury's, Morrisons, Somerfield, Co-op, M&S, and Waitrose. See Competition Commission Groceries Market Investigation Final report Appendix 9.8
- The 11 retailers recommended to be covered by the groceries ombudsman are: Aldi, Asda, The Co-op (which includes Alldays), Iceland, Lidl, Marks & Spencer, Morrisons, Sainsbury’s, Somerfield, Tesco (which includes One Stop) and Waitrose.
- Some supermarkets have claimed the cost of an ombudsman would lead to increased prices for consumers. But independent research by leading economist Professor Roger Clarke found that: ‘The remedies, if effectively enforced, are likely to lead to lower prices in some cases. Professor Clarke’s research also refutes suggestions that consumers would be adversely affected by the supermarket ombudsman. Instead they would benefit from more choice and better products.
- Professor Clarke’s paper The Impact of a Groceries Ombudsman on Consumers’ Best Interests is available at http://www.rogerclarke.org.uk/sitebuildercontent/sitebuilderfiles/finaldraftpdf
- A YouGov survey in Nov 2008 found 81% of people interviewed branded as unacceptable supermarkets’ behaviour such as paying suppliers less than agreed sums. 59% of consumers would consider switching to another supermarket if they found the chain where they did their main shopping had carried out these practices.
