The Office of Fair Trading has called on product manufacturers to “overcome their fear of complaining” and to provide evidence of the role of the large supermarkets when it comes to supplying their grocery products.
The OFT has found that “by and large” supermarkets are complying with the Supermarkets Code of Practice in its first annual review of the effectiveness of the code.
But is has also said that the code’s mediation process is not being used to resolve disputes between suppliers and supermarkets, and that as a consequence “it has been difficult to assess the code’s effectiveness”.
The OFT found “relatively little evidence” of breaches of the code after an audit of 500 grocery supplier relationships with four supermarkets – Asda, Safeway, Sainsbury’s and Tesco. But there was some evidence of breaches consisting of supermarket requests that suppliers make lump-sum payments in relation to loyalty and continued supply. These payments mostly concerned Safeway, prior to its acquisition by Wm Morrison.
The Association of Convenience Stores public affairs and communications manager James Lowman says: “It is naive and patronising for the OFT to advise suppliers to ‘overcome their fear of complaining’ under the code and use the dispute resolution procedures. It has been painfully apparent from the outset that supermarket buying power makes the code itself unworkable.”
It has been lobbying for the OFT to take action on consolidation in the grocery market which it claims is putting pressure on its members’ businesses.
Lowman adds: “While the OFT stalls, the supermarkets continue to increase their dominant position through the convenience store acquisitions.”