The tense relationship between food retailers and manufacturers once again became a subject of heated debate in the UK after news broke this morning (4 August) that the Competition Commission has moved to strengthen the code of practice governing dealings between the two groups. The Commission’s controversial move to call on the Government to establish an ombudsman – without the support of most retailers – has likewise provoked a mixed reaction. Here are some of the key quotes from both side of today’s debate.
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“Our inquiry clearly revealed problems that require action and which, if left unchecked, would damage the consumer. We continue to believe that everyone’s interests – and that includes retailers – would be served by tackling a problem that has clouded the industry for many years now.” – Peter Freeman, Competition Commission chairman
“We have seen no evidence to support claims that retailers are unfairly putting the squeeze on their suppliers. The extensive Grocery Inquiry concluded the UK grocery market is operating efficiently and serving the needs of customers.” – Andrew Opie, British Retail Consortium food director
“Despite a major investigation, which found the supermarkets guilty of abusing their buyer power, the Competition Commission has failed to get agreement for a watchdog which would stamp out the worst practices of the supermarkets and get a better deal for consumers.” – Helen Rimmer, Friends of the Earth’s food campaigner
“This should be about customers. The last thing needed at any time, let alone in a recession, is a multi-million pound bureaucracy – unnecessarily piling on costs and pushing up shop prices.” – Opie
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By GlobalData“An ombudsman is bad news for consumers – it will effectively be a one-sided pressure group for price rises from big multi-national suppliers, allowing inflation in through the back door.” – Spokesperson, Asda
“The establishment of an ombudsman will give suppliers the confidence to invest and to innovate which will, in turn, improve consumer choice, produce better products, and ensure food remains affordable.” – Peter Kendall, National Farmers Union president
“In order to keep prices low and profits high, British supermarkets cut costs by squeezing suppliers abroad.” – Simon McRae, War on Want senior campaigner
“Most supermarket suppliers are multi-national food businesses perfectly able to stand up for themselves. Retailers are right to defend customers’ interests by negotiating robustly with them. Very few farmers deal directly with supermarkets.” – Opie
“The Food and Drink Federation fully supports the new grocery supply code of practice in order to ensure that commercial relationships in the supply chain operate fairly. We also support the creation of an ombudsman to oversee its operation, particularly for small and medium-sized enterprises.” – Melanie Leech, Food and Drink Federation director general
“The last thing the grocery sector needs is an added layer of bureaucracy in the shape of an unelected, unaccountable quango. It will only serve to add to costs – costs that will ultimately be borne by the consumer.” – Neil Saunders, Verdict Research retail analyst
“The costs of the ombudsman, which we think would be about GBP5m (US$8.5m) a year in total including initial set-up costs, are very modest compared with the annual turnover of GBP70bn in grocery supplies to retailers.” Freeman
“Does anyone seriously believe a quango can be run for the GBP5m a year, as the Competition Commission claims? And that ignores the massive knock on costs that will be generated within retailers’ own businesses. In the end it’s customers who’ll foot the bill.” – Opie
“We don’t agree with the need for an Ombudsman and consider that it will result in additional bureaucracy and unnecessary cost.” – Spokesperson, Sainsbury’s
“The Government must stand up to the big retailers and set up an independent watchdog to put an end to the supermarkets’ bullying behaviour and secure a fairer deal for shoppers and farmers alike.” – Rimmer
“The new code will only work if proactively and robustly enforced so the climate of fear that suppliers endure can be eliminated. This can only be achieved through the implementation of an ombudsman.” – Kendall
“We consider that the OFT is well placed to continue in its current role of regulating the code and that there is no need to establish new powers… considerable changes from the new GSCOP should be allowed to take effect and any changes to regulation should be considered after about two years.” – Sainsbury’s
“The new statutory code of practice should be allowed to work, before an unnecessary new ombudsman quango is introduced.” – Asda
“Lord Mandelson must reject the Competition Commission’s recommendation.” – Opie
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