Tesco boss criticises supermarket ombudsman plans

Tesco’s chief executive, Terry Leahy, has criticised the government’s plans to introduce a watchdog to settle disputes between supermarkets and suppliers, claiming it could hurt consumers.

Terry Leahy

The competition watchdog asked the government last year to establish an ombudsman after a majority of retailers failed to agree on a voluntary arrangement.

But in an interview with the Financial Times, Leahy attacked the proposals, saying the consumer benefited from the positive level of competition between retailers.

The paper quotes him as saying: “Everyone knows supermarkets are one of the most competitive industries around. That competition puts power in the hands of the consumer,”

“An ombudsman would be there to protect suppliers but should be there to protect consumers.”

The competition commission conducted an investigation between 2006 and 2008 and found that the strength of Britain’s top four grocers – Tesco, Asda, Sainsbury’s and Morrisons – has helped to keep food prices down for shoppers.

But there are concerns the consumer could suffer if retailers squeeze suppliers to the extent that they can’t afford to invest in products or to innovate.

The plans have been criticised by the British Retail Consortium, which says it will add millions onto customers’ bills.

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