NFU comment on competition commission provisional findings
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Wednesday, 31, Oct 2007 12:00
Action to curb supermarket malpractice is urgently needed, says the NFU, on the back of the Competition Commission’s provisional findings, published today (Wednesday), that the major supermarkets are guilty of “transferring excessive risk and cost to suppliers through various purchasing practices”, and its warning that this could damage innovation and investment to the ultimate detriment of consumers.
Commenting on the Commission’s findings, NFU President, Peter Kendall, said: “We submitted detailed evidence on the widespread abuse of supermarket power, and we are not in the least bit surprised that the Competition Commission has accepted that this has happened and does need to be addressed.
“It is in everyone’s interests that the food supply chain is vibrant, dynamic, transparent and profitable, so that farmers and growers are able to supply the quality and choice that consumers expect and deserve.
“The NFU is committed to working with the major retailers and other customers to forge strong business relationships in the supply chain that will deliver the goods for all concerned.
“But in the light of the practices exposed by the Competition Commission, there is a clear need for a much tighter code of practice to govern supermarkets’ relationships with their suppliers, and for that code to be enforced, either by the Office of Fair Trading or by some other independent third party such as an adjudicator or ombudsman. We are pleased that both of these options feature in the Commission’s ‘list of possible remedies’.
“A tougher code, independently monitored, will provide the basis to dispel the culture of fear in the supermarket food supply chain, and replace conflict and suspicion with transparency and trust.”
Mr. Kendall said that the NFU would be submitting detailed evidence to the next stage of the Commission’s inquiry and looked forward to playing a constructive part in putting in place arrangements to ensure fair and enforceable terms of trade for supermarket suppliers.
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Note to editors:
The Competition Commission has found that “the exercise of buyer power by certain grocery retailers” has led to practices – the report identifies 26 - that “transfer excessive risks and unexpected costs to…suppliers”. This situation is “a feature of the market for the supply of groceries by all grocery stores” and “prevents, restricts or distorts competition” in the supply of groceries.
Among the remedies which the CC is considering are: widening the scope of the Supermarket Code of Practice (SCoP) to include a broader range of retailers and symbol groups; changing the nature of the restrictions in the SCoP; and changing “the institutional arrangements for the monitoring and enforcement of the SCoP”.
It has invited views on these issues, including on whether the Office of Fair Trading is best placed to monitor compliance with the SCoP or whether it could usefully receive “expert assistance in its monitoring and compliance role”, possibly from “a supermarkets ombudsman”.
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