GROCERY MARKET REFORMS MUST NOT DAMAGE HEALTHY COMPETITION - BRC

30 April 2008

The British Retail Consortium (BRC) has welcomed the Competition Commission’s conclusion that competition in the UK grocery market is delivering good outcomes for customers.

The BRC is warning the Government against introducing legislation that would damage customers’ interests by hampering healthy competition and adding to costs.

In particular the BRC is criticising recommendations for an ombudsman to rule on retailers’ relationships with suppliers saying, as the Commission has found no evidence of failure in these relationships, there can be no justification for a multi-million pound quango which would ultimately be paid for by customers.

British Retail Consortium Director General Stephen Robertson said: “The Commission has again concluded that the UK’s highly-competitive grocery market is benefiting customers. It is crucial that any new legislation does not damage customers by adding to costs and hampering the successful competition which, the Commission acknowledges, delivers value, choice, innovation and convenience. “

On an ombudsman Stephen Robertson said: “This is unjustifiable pandering to supplier pressure groups. The Commission has not produced any evidence to show systematic failure in supermarkets’ relationships with suppliers. Despite critics’ claims, the Commission did not find suppliers in fear of retaliation.

“With retailers battling to keep food prices down, this is entirely the wrong time to be thinking about introducing a pointless new multi-million pound quango which will ultimately be paid for by cash-strapped customers.”

The BRC is stressing the Commission can only recommend the Code apply to suppliers who deal directly with supermarkets. Most farmers supply intermediaries and don’t fall into that category. If the Government were to decide to extend the scope of a code or ombudsman to farmers that would simply produce a mass of costly new bureaucracy.

On an extended Supply Code of Practice Stephen Robertson said: “The voluntary supplier code, which is currently compulsory for the “big four” supermarkets, remains a sensible attempt to set down what is and is not permissible behaviour, though it has been little used. Robust negotiation is a healthy part of any business relationship. It helps deliver a good deal for customers. Any extended code must not introduce a legalistic process that works against customers’ interests.”

On new local authority planning powers Stephen Robertson said: "These recommendations need to be seen in the context of the Government’s current review of the planning application process, which aims to make the system faster and more efficient.

“The planning system should serve the whole community and minimise the burdens on retailers who are seeking planning permission because retail developments bring clear regenerative benefits to local areas.

“Retailers have different views on whether giving local planners new powers to assess the competition effects of planning applications, on top of their existing considerations, has any part to play in this.”

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