Trade Bodies Unite to Urge Statutory Grocery Ombudsman

Trade organisations representing local shops and wholesalers have called on the Competition Commission to act swiftly and decisively to introduce an Ombudsman to tackle excessive use of buyer power by major grocery retailers. The Commission’s Grocery Market Inquiry found that such an Ombudsman was necessary to prevent damage to suppliers and to the consumer, yet since the publication of their report in April 2008, the Commission’s progress towards introducing an Ombudsman has been extremely slow. The Scottish Grocers’ Federation (SGF), ACS (the Association of Convenience Stores), the Federation of Wholesale Distributors (FWD), and the Northern Ireland Independent Retail Trade Association (NIIRTA) have today submitted comments in response to the Commission’s latest consultation on this issue.

SGF Chief Executive John Drummond said: “We are concerned that the slow rate of progress in bringing about an Ombudsman presents a risk to consumers – as it is their interests that the recommendation for an Ombudsman and Grocery Suppliers Code of Practice were designed to protect. We believe that the major multiples will not voluntarily agree the terms for creating an Ombudsman, and that it is time for the Commission to move towards introducing an Ombudsman through primary legislation.”

James Bielby, Chief Executive of the Federation of Wholesale Distributors, said: “It is tough for wholesalers to compete on price in the face of abuse of suppliers by the multiple supermarkets identified by the Competition Commission inquiry. A strong ombudsman is needed to enforce an effective code of practice to prevent this abuse, and take a step towards a fairer grocery market, not just for wholesalers and suppliers, but ultimately for consumers as well.”

Introducing an Ombudsman on a statutory footing would bring the following benefits:

• the possibility of punitive fines for breach of the code

• more extensive powers of intervention

• making compliance with a Grocery suppliers Code of Practice a direct obligation

The Commission’s report highlighted the consumer detriment caused by the buying practices included in the Code of Practice, which were primarily due to the transfer of excessive risk and unexpected costs to suppliers, for example:

• the potential for suppliers to increase costs to retailers other than the largest

• the removal of planned promotional activity from smaller customers due to unexpected demands from larger customers

• the shelving of plans to introduce new products into other retail channels