In January, the Government announced that it will embark on a consultation to consider the nature and role of a supermarket ombudsman. But with the consultation due to take 12 weeks, it is unlikely that suppliers will be able to raise their grievances until late 2010, more than two years after the Competition Commission confirmed that an ombudsman was urgently needed.
A voluntary code for supermarkets has been shown to be ineffective; the final report from the Competition Commission on the Groceries Market Investigation reveals that in 2006 – five years after the adoption of the 2001 Supermarket Code of Practice – instances of poor practices by supermarkets actually increased by over 30%.
Fiona Gooch, Traidcraft's senior policy advisor, said: "The Government's recognition that the power wielded by large grocery retailers puts pressure on small producers is a welcome development. And it means that there may finally be an end to small farmers in the developing world facing excessive risks caused by decisions made by our own grocery sector.
"But until there is a watchdog in place, the strengthened code of practice is in danger of being futile. A speedy and unequivocal consultation is needed so that a supermarket ombudsman can begin to stem unfair practices and help the grocery sector return to being a fair market as soon as possible."
A survey by Traidcraft showed that eight in ten shoppers wanted a watchdog to monitor and penalise supermarkets which treat suppliers unfairly.
Industry accusations that the cost of the watchdog would lead to rising food prices were disputed in an independent report by economist Professor Roger Clarke who found that retailers would each pay just 0.005% of their turnover to fund the ombudsman and the benefits to shoppers would outweigh these costs.
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Notes to Editors:
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Fiona Gooch, Traidcraft senior policy advisor, is available for comment.
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The 10 retailers covered by the strengthened Groceries Supply Code of Practice (GSCOP) are: Aldi, Asda, The Co-op (which includes Somerfield, Alldays), Iceland, Lidl, Marks & Spencer, Morrisons, Sainsbury’s, Tesco (which includes One Stop) and Waitrose.
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The Principle of Fair Dealing included in the new Groceries Supply Code of Practice (see the Competition Commission website) is defined as: "A Retailer must at all times deal with its Suppliers fairly and lawfully. Fair and lawful dealing will be understood as requiring the Retailer to conduct its trading relationships with Suppliers in good faith, without distinction between formal or informal arrangements, without duress and in recognition of the Suppliers’ need for certainty as regards the risks and costs of trading, particularly in relation to production, delivery and payment issues."
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Requirements have been referenced as follows in the new GSCOP: "a Retailer will ‘Require’ particular actions on the part of a Supplier if the relevant Supplier does not agree, whether or not in response to a request or suggestion from the Retailer, to undertake an action in response to ordinary commercial pressures. Where those ordinary commercial pressures are partly or wholly attributable to the Retailer, they will only be deemed to be ordinary commercial pressures where they do not constitute or involve duress (including economic duress), are objectively justifiable and transparent and result in similar cases being treated alike. The burden of proof will fall on the Retailer to demonstrate that, on the balance of probabilities, an action was not Required by the Retailer;"
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The Cross Cutting Group comprises: ActionAid UK, Association of Convenience Stores, Association of Master Bakers, Banana Link, Breaking the Armlock Alliance, British Brands Group, British Independent Fruit Grower’s Association, Campaign to Protect Rural England, Country Land and Business Association, Friends of the Earth, National Farmers’ Union of England and Wales, National Farmers’ Union of Scotland, Rural Shops Alliance, Traidcraft.
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Traidcraft, best known as the UK’s leading fair trade organisation, also includes a development charity.
CONTACT: Melissa Duncan (+44) (0)7831 576103
