High Street split over Grocery Watchdog

Contact between the Grocery Market Action Group¹ and supermarket chief executives reveals that Waitrose, Marks and Spencer and Aldi do not oppose further regulation, believing their good relationships with suppliers mean they have nothing to fear from independent scrutiny².

However, the big 4 supermarket chains - Tesco, Sainsbury's, Morrisons and Asda – and Iceland have so far refused to support the scheme citing objections such as its potential cost-raising effect on food prices.

This is despite the findings of the independent Competition Commission and recent academic research which has shown that an ombudsman is likely to raise standards and, in some cases, lower prices for consumers³.

And in the case of Tesco, which recently reported record £3bn annual profits, less than 5 hours of trading profits would cover its full annual contribution towards the cost of the scheme.

This comes as the deadline for the Competition Commission's 30-day consultation on its draft ombudsman proposal expires on Thursday, 28th May, by which time the supermarkets will have given a formal indication of whether they intend to co-operate with the Commission's proposal.

Last April the Competition Commission recommended that a grocery market ombudsman be put in place to clamp down on unacceptable trading practices by supermarkets which transfer excessive risks to suppliers⁴.

However, the Commission can only implement its proposal if retailers voluntarily agree to sign up to it. Otherwise the matter will be referred back to Government Ministers who have failed to confirm that they are willing to act to stop the abuse of suppliers.

Fiona Gooch, Traidcraft senior policy advisor, said: "Those supermarkets not willing to work with the Competition Commission to implement a watchdog should seriously reconsider their position before it's too late and they find themselves following the path of the poorly regulated financial sector which, for so many, ended in forced legislation and apologies."

Chairman of the Grocery Market Action Group, Andrew George MP is now urging consumers to take their custom to those retailers who have proved they are serious about fair dealing by working with the Commission.

Commenting he said: "Whilst all the big chains are happy to promote themselves on the basis of their good relations with suppliers, only by accepting independent scrutiny can they prove that they are serious about fair dealing. Both consumers and suppliers stand to gain but the supermarkets will only change their position if their customers show they are only willing to give their money to retailers they can trust."

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Notes to Editors:

1. The Grocery Market Action Group is campaigning for fair dealing throughout the Grocery market. It includes representatives from NGOs, supplier organisations and academics. The members of the Group are:

2. Andrew George MP (LD), David Drew MP (Lab), and Daniel Kawczynski MP (Con) wrote on behalf of the Group to all supermarkets with a turnover greater than £1billion. At the time of writing these were:

Waitrose, Marks and Spencer and Aldi have responded that they are willing to work with the Competition Commission on the scheme involving either a new Ombudsman or a greater role for the Office of Fair Trading. The Co-op are due to reveal their position next week.

The Three MPs have also tabled a motion in Parliament (EDM 580: Grocery Market Ombudsman) calling for the Government to commit to the establishment of an Ombudsman. To date this has been signed by 154 MP from all parties.

3. See Professor Roger Clarke's paper entitled The Impact of a Groceries Ombudsman on Consumers' Best Interests

4. See Competition Commission, Final Report on the Supply of Groceries in the UK, 30th April 2008