The chief executive of UK retailer The Co-operative Group said today (17 March) that he does not believe that a supermarket ombudsman will protect suppliers from retailers.
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Speaking at the IFE trade exhibition, Peter Marks said that the Competition Commission’s proposal to introduce a swathe of measures designed to curb the power of the UK’s largest supermarkets “will not work”.
“I think it is very difficult for third parties or otherwise to interfere in a commercial relationship,” Marks said. “Now I understand the pressure that has been created to try and redress the balance. I think it’s really unfortunate that we have got to this stage. Do I really think an ombudsman is going to protect suppliers from the big bad retailers? I really don’t think so.”
Marks added: “We’re as tough as anyone. We have to be. If we were soft, compared to Tesco, Sainsbury or Asda, what happens is, I then subsidise my competitors and I can’t do that because if I did then we’d end up going down the drain.
“If we have a tough negotiation with a supplier and we shake hands and we agree on a price and terms then we’ll stick to that. Commercial relationships have to be tough on both sides, that’s the nature of competition.”
The long-awaited report into the grocery market proposed the establishment of an ombudsman to police the relationship between suppliers and retailers and new planning restrictions to promote competition between retailers.
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By GlobalDataLast month, the UK’s Competition Commission announced plans to introduce a code of practice to ensure the fair treatment of suppliers and address issues hindering competition in the market.
In its investigation into competition in the UK’s grocery sector last year, the CC said that a code of practice was required to control the buying power of certain supermarkets.
The new Groceries Supply Code of Practice is an amendment to the existing code that the Commission hopes will prevent supply chain practices that transfer excessive risks and unexpected costs to suppliers.
Despite this, Marks said the company is on “firm ground” and will deliver a “significant increase” in profit on top of last year’s results, when they are announced in May.
“We are delivering consolidation, we are delivering performance, we are also delivering top line performance, and our food business, which is our biggest business has just had 12 consecutive quarters of like-for-like growth. So it’s not just hollow talk, we are actually delivering and the Somerfield deal is the icing on the cake.
“Had we not consolidated, had we not been improving our profit, had we not had a robust business plan, we couldn’t have got the brands to support us, right in the middle of the credit crunch with a deal of that nature. So, I think we are on pretty firm ground.”
