The Department of Business, Innovation and Skills would set up then position and it would be appointed by the Office of Fair Trading. The ombudsman would be expected to promote consumer interests and settle disputes over the new code.
The Competition Commission also proposes for a new Grocery Supply Code of Practice (GSCOP) with the aim of reducing anti-competitive practices imposed by retailers.
Retailers covered by the order now have six months to comply.
CC chairman and chairman of the groceries inquiry Peter Freeman says: “Our inquiry clearly revealed problems that require action and which, if left unchecked, would damage the consumer. We continue to believe that everyone’s interests — and that includes retailers — would be served by tackling a problem that has clouded the industry for many years now.”
“Whilst some retailers have recognised this, regrettably the majority have not. We made every effort to persuade retailers of our case as it would be the quickest way to establish the Ombudsman. We are now left with no alternative but to set out the new Code of Practice and recommend that BIS set up the Ombudsman to oversee its operation.”
The CC’s investigation into the sector ended last year and identified concerns over practices between retailers and suppliers. It has since attempted to get agreement from grocery retailers to voluntarily set up a supervisory body.
“There are two different issues here. We support an effective Code of Practice and the latest changes will strengthen the Code further by including more retailers and making contractual terms clearer across the industry.,” says Tesco executive director Lucy Neville-Rolfe.
“However, the industry has been unable to agree on the additional proposal for an Ombudsman. We believe that perversely the Ombudsman would mainly benefit large successful suppliers who are well able to look after their own interests. It’s a highly competitive industry and if our ability to negotiate with such suppliers is reduced the inevitable result will be higher prices to consumers at a difficult time.”
It is expected to cost £5 million each year, including the set-up costs.
“This should be about customers. The last thing needed at any time, let alone in a recession, is a multi-million pound bureaucracy – unnecessarily piling on costs and pushing up shop prices,” says British Retail Consortium food director Andrew Opie.