Farmers Must Speak To OFT About Supermarket Concerns

4.42.00pm BST (GMT +0100) Tue 27th Apr 2004

During his meeting today with Gerry Sutcliffe, the Trade Minister, Andrew George MP, Liberal Democrat Shadow Food and Rural Affairs secured the Minister's commitment to pursue the issue of the supermarkets' voluntary code.

"The Minister is sympathetic to our criticisms of the code's weakness."

"The OFT will undertake an audit of the code with particular emphasis on certain clauses and whether these have been breached."

"The review will concentrate on payment times, retrospective reductions in price, supplier contributions to marketing costs, lump sum payments as a condition of supply, payments in respect of consumer complaints and tying of third party goods and services."

"I would appeal to any suppliers with concerns to speak to the OFT who will treat their complaints in absolute confidence."

"This may be the best opportunity we have had a for a long time to reverse the trend of greater and greater domination of the food supply chain by the big supermarkets."

Notes

The OFT 'Supermarkets Code of Practice' report reviewed the operation of the Code, which covers Asda, Safeway, Sainsbury and Tesco. The report found that 80-85% of respondents said 'the Code has failed to bring about any change in the supermarkets' behaviour'; it concluded 73% of respondents 'reported a fear of complaining amongst suppliers. http://www.oft.gov.uk/News/Press+releases/2004/28-04.htm>

Liberal Democrat Proposals for Change

Increasing concentration within the retail sector, and the consequent concentration of buying power, will result in this situation worsening to the further detriment of suppliers. Therefore changes have to be made to the Code to ensure that the dominance of the buyers does not continue to dictate market conditions for the suppliers. Advice I have received suggests that existing legislation will permit changes that I am proposing which are as follows :

(i) Food Trade Inspector

The creation within the OFT of a dedicated Food Trade Inspector who:

• Proactively requests information to monitor all aspects of the Code on a continuing basis.

• Acts as the first point of contact for any supplier that claims a breach of the Code and then proceeds to investigate that claim further.

• Publishes findings/outcomes of any investigation.

(ii) Strengthening of the existing Code

In the light of evidence collated by the OFT, and from elsewhere, the Code Of Practice should be strengthened through:

• Guaranteeing the anonymity of any complainant unless the supplier indicates otherwise.

• The replacement of the 'reasonableness' tests attaching to many of the terms within the Code with objective criteria - eg - setting out what is considered to be reasonable payment terms.

• The expectation that supermarkets make a statement in their Annual Accounts in respect of their compliance with the Code.

• Ensuring the Code applies to any supermarket that has a stated proportion of the market share rather than the four supermarkets that have signed up to the Code.