News

An independent ombudsman with powers to "proactively investigate" the grocery supply chain would be "good news for the sector", according to accountancy firm Grant Thornton.

The Competition Commission (CC) published its recommendations for the grocery market on Friday (15 January), following a two-year investigation.

It called for a "competition test" to assess planning applications, an end to exclusivity agreements for land use and a strengthened Groceries Supply Code of Practice (GSCOP).

But Duncan Swift, head of Grant Thornton's food and agribusiness recovery group, said it would only be effective if the ombudsman appointed to enforce the code did not have to rely on complaints from suppliers.

"It would be excellent if the ombudsman had powers to do investigations, set terms as to reasonable [practice] and adjudicate," he said.

The Association of Convenience Stores (ACS) echoed the view that the code would only work if the ombudsman were "given teeth".

ACS chief executive James Lowman said: "The biggest problem under the last code was the lack of complaints engendered by a climate of fear among suppliers."

The British Retail Consortium, however, attributed the lack of complaints to "overwhelmingly mutually beneficial" relations between supermarkets and suppliers, rather than fear of retaliation.

GSCOP will also be expanded to take into all multiples that have a turnover in excess of £1bn, which includes Somerfield, Waitrose and Marks & Spencer.

Swift welcomed this move because it was not necessarily the largest supermarkets that "exhibit the most abuse of buyer behaviour".

Around three-quarters of the UK grocery market is accounted for by the "big four" multiples: Asda, Morrisons, Sainsbury's and Tesco.

Tesco welcomed the GSCOP, but said that an ombudsman would be bureaucratic and an "unnecessary cog" in the supply chain.

The Office of Fair Trading referred the groceries market to the CC for investigation in May 2006.

Interested parties have until Friday 7 March to comment on the recommendations. The final report has to be published 8 May.

Click here for more information on the CC's proposals.