Divided opinions over grocery ombudsman

Smaller UK retailers will be given protection from supermarkets in the form of an ombudsman following the government’s accepted recommendation for a body to enforce the Groceries Supply Code of Practice.

The introduction of an enforcer of the code, which was drawn up by the Competition Commission in 2008 after a two-year inquiry into alleged abuses in the groceries market, has been welcomed by the Forum of Private Business. However, the British Retail Consortium fears an ombudsman would cost UK customers millions of pounds.

Next month the UK government will start its consultation on how best to enforce GSCOP, which will include deciding on the level of power to be held by the ombudsman.

However, the FPB has voiced concerns over the potential lack of participation of suppliers in the process, who, it says, will fear a dramatic loss of business if they shop the supermarkets’ poor treatment towards them.

Even though the GSCOP, which will cover supplier issues such as late payment and retrospective pricing as well as consumer complaints, is a welcome move for the FPB, research it recently carried out reported that 76% of respondents wanted a watchdog to oversee the GSCOP.

Furthermore, another survey revealed that 74% of business owners believed they should be guaranteed anonymity when giving evidence to both the Competition Commission and the Office of Fair Trading.

Meanwhile the BRC blasted the news as “disappointing” and is challenging the claim that the only extra cost to this would be the £5 million the retailers are charged for setting up the Quango.

The BRC’s director general Stephen Robertson, said: “This would tip the balance of negotiating power in favour of multi-national food manufacturers allowing them to drive up the prices customers pay.

“This is not about farmers, very few deal directly with supermarkets, and it’s not about a ‘mere’ £5m of extra costs. The UK grocery market is worth £130 billion a year. If threats of involving an ombudsman allow big food companies to squeeze even 0.1% more out of supermarkets, that’s £130m extra on customers bills.    

Robertson added: “It’s disappointing that the government has decided to pursue this despite the lack of evidence that it is needed.

"There is already a supplier code, overseen by the Office of Fair Trading (OFT) and offering the right to independent arbitration. It has long been compulsory for the big four supermarkets and is being extended to more retailers next month.”

Jane Parkinson, 18.01.10