Supermarkets Code of Practice

The OFT has controversially concluded that the Supermarkets Code of Practice should remain unchanged but be used more effectively. Consumers are benefiting from competition in grocery retailing, and evidence has not come forward that the code is being breached.

 

The OFT received 29 responses to its invitation for comments on the findings of the Supermarkets Code compliance audit report and the wider role of supermarkets in the supply of groceries and other goods. In a report published today the OFT says that evidence has not been provided to show that the Supermarkets Code should be replaced or that the market for the supply of groceries and other goods is not working well for consumers.

 

The OFT will continue to encourage the use of the code and work with supermarkets and suppliers to improve its practical usefulness.

 

Stakeholder Response: British Retail Consortium

 

 

BRC director general, Kevin Hawkins, said: "The OFT's findings confirm what the BRC has said all along - that supermarkets are observing the code but suppliers are not making use of it. The OFT also conclusively rules out the creation of an ombudsman or regulator for the industry.

 

"We also welcome the confirmation that consumers are benefiting from competition in grocery retailing, with supermarkets providing lower food prices, greater choice and high quality produce."

 

Stakeholder Response: Which?

 

 

Which? welcomes the Office of Fair Trading’s (OFT) review of  supermarket/supplier relationships concerning demands for more regulation.

 

Which? agrees with the OFT that this is not a market that is damaging consumer interests, nor is it one in need of further regulation. Greater regulation would simply serve to increase costs for supermarkets, with the potential knock-on effect being higher prices and reduced choice for consumers. 

 

There is no evidence to suggest that supermarkets are not responding to consumer demands. The recent problems experienced by Safeway and Sainsburys have shown just how effective consumers can be in exercising choice.

 

Phil Evans, principal policy adviser, Which?:

 

“The world has moved on from the old-fashioned scenario of the house-wife being responsible for the weekly shop. Supermarkets now reflect these shifts in traditional roles and nine-to-five working patterns. With this has come a demand for a more flexible supermarket sector. Using regulation to turn back the clock to a mythical world of jolly butchers and attentive corner shops will involve a forced reversal of these demographic trends. If consumers want to change the high street, they can do so very effectively with their wallets.”

 

Stakeholder Response: Forum of Private Business

 

 

 

More UK suppliers will be going bust as a result of the OFT refusing to crack down on the big four supermarkets. And it will mean customers will be forced to buy more foreign imported goods instead.

 

That's the view of leading business pressure group, the Forum of Private Business (FPB),  which meets with the OFT to discuss the maltreatment of suppliers.

 

"Small firms desperately need the OFT to bear its teeth and ensure the code of practise is properly enforced,' said the FPB's policy spokeswoman Victoria Carson. "We speak to suppliers every week who tell us that the greed driven bullying tactics of the supermarkets are fatally undermining their business.

 

"But because the OFT will not accept anonymous complaints from suppliers the gapping wound is not receiving surgery. Critically we need the OFT to find a method of accepting suppliers anonymous evidence. The fact that suppliers are so afraid to speak out is symptomatic of the culture of fear and intimidation the supermarkets have created - despite the existence of a code of practise.  Particular areas for concern are loyalty payments, over-riders and forced contract renegotiation (see notes to editors)."

 

Ms Carson said the OFT's argument that the consumers are benefiting from grocery retailing competition is fundamentally flawed.

 

"The supermarkets ruthless desire to drive down costs is actually reducing the quality and choice of goods on the shelves," she said. "This is the reality behind the supermarkets propaganda and the reality is bad for consumers.

 

"Moreover if there is misunderstanding of the code, as the OFT claims, that means more work needs to done to promote what it exists for. The FPB is happy to help the OFT with this and still believes a code of practise is valid – providing it can be properly enforced."

 

Ms Carson added the FPB agreed when the OFT say "effective competition and straight dealing promote quality, keen pricing and consumer choice."

 

"Unless the OFT takes tougher action to ensure there is straight dealing, more of Britain's supermarket suppliers will go bust and will be replaced by suppliers from overseas."