News

The Competition Commission (CC) has called for a "strengthened and extended" Groceries Supply Code of Practice (GSOP) and an independent Ombudsman in the final report on its two-year groceries market investigation.

The report, published today (30 April), concluded the market was "in many important respects" benefiting consumers, which was the main focus of the investigation, but there were areas that needed to be addressed to better serve the public.

CC chairman Paul Freeman added: "Some aspects of the way retailers deal with suppliers could, if left unchecked, harm consumers."

Consequently, the CC has confirmed the setting up of the GSOP, affecting retailers controlled by groups with annual turnover of more than £1bn. The GSOP will require retailers to provide "notice of and reasons for de-listing suppliers and significantly reducing suppliers' business", which was the main method for shifting risk onto suppliers.

Retailers will also have to establish an ombudsman to monitor and enforce compliance with the code. If this is not done within a reasonable period, the CC has recommended the government to intervene and award power to levy "significant financial penalties".

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

Tesco chief executive Sir Terry Leahy said: "We welcome the broadening of the supplier code, but feel an ombudsman would be counterproductive and would reduce the benefits of competition."

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