Supermarkets ombudsman to be appointedNew watchdog to enforce code of practice

16 February 2008

A couple reading a food label in a supermarket

An independent ombudsman is set to be appointed to oversee the UK's supermarkets.

The Competition Commission wants a new, stronger code of practice for the grocery supply chain which will be enforced by the new watchdog.

Its package of proposals also includes the creation of a 'competition test' for planning decisions involving new, large grocery stores.

A proposed new 'Groceries Supply Code of Practice' would replace the existing code, extending it to all UK grocery retailers with a turnover greater than £1 billion.

Land banks

An independent ombudsman should be appointed to investigate suspected breaches of the new code, the commission said.

The ombudsman's role would be to arbitrate on disputes between suppliers, producers and the big food chains.

The Competition Commission also wants to stop the practice of supermarkets buying up banks of land to prevent rival chains opening up new stores nearby.

To achieve this it wants restrictive covenants - which can prevent land being built on by a competitor - to be banned.

Restrictive covenants already in place on retailers' land in high-density areas should be lifted, the commission said.

Anti-competitive

When it comes to the new competition test for future supermarket planning applications, the commission wants the Office of Fair Trading to act as adviser to local planning authorities.

The commission's recommendations follow the initial findings of its inquiry into possible anti-competitive activity in the UK groceries market.

Those findings, published in October, highlighted problems in the relationship between supermarkets and their suppliers.

In some cases, big grocery chains were retrospectively changing their agreements with suppliers to shift excessive risks and costs on to them.

Suppliers

The way retailers dealt with their suppliers could harm consumers if left unchecked, the commission warned.

Today's proposals say retrospective changes to agreements between retailers and their suppliers should be banned.

The Office of Fair Trading Trading referred the inquiry into the UK groceries market to the Competition Commission in May 2006.

The Commission is now inviting responses to its package of proposals.

Its final report is expected to be published by the end of April this year.

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