Supermarket ombudsman consultation

The Competition Commission has published a public consultation on the proposal for a supermarket ombudsman to police the new Groceries Supply Code of Practice (GSCP).

The ombudsman would arbitrate on disputes between retailers and suppliers and investigates complaints under the new GSCP, which was itself the subject of a consultation earlier this year.

Both the new code and the ombudsman were proposed after an extensive investigation into the groceries industry by the CC, which concluded in April 2008.

Peter Freeman, CC chairman and chairman of the Groceries Inquiry said: “Our report last year uncovered significant evidence of problems in the way retailers deal with their suppliers, which, if left unchecked, will ultimately harm consumers’ interests.

“We believe that the creation of an independent Ombudsman is necessary to restore confidence amongst suppliers that there is an objective person looking into disputes and complaints. It is in everyone’s interests to have a system in place in which all parties can have faith.”

Unlike the GSCP, the CC does not have the power to establish an Ombudsman itself, so doing so would require the agreement of retailers. At present this looks unlikely, with many major retailers voicing opposition to the proposals on the grounds that it will add costs.

Andrew Opie, British Retail Consortium food director, said: “The last thing needed at any time, let alone in a recession, is a new multi-million pound bureaucracy - unnecessarily piling on costs and pushing up shop prices.”

The CC, however, argues that “the difficult economic circumstances at present would seem to underline the need for an Ombudsman, rather than remove it” and that the “modest costs” involved with setting up an Ombudsman would be more than justified in tackling an issue which has “clouded the industry for several years now.”

If retailers do not agree to the proposals, the CC has said it will recommend to the Department for Business Enterprise and Regulatory Reform (BERR) that it takes steps to establish the Ombudsman instead.

NFU president Peter Kendall has praised the CC for holding its ground on the issue. “I am relieved it has not been swayed by disingenuous short-term scaremongering by retailers,” he said.

“An ombudsman acting as a proactive enforcer of a strengthened code of practice would give suppliers the confidence to invest and innovate and produce a greater range of quality products for consumers, and is therefore clearly in consumers’ best interests.”

The NFU pointed out that recent research from leading economist Professor Roger Clarke has cast doubt on retailer’s assumption that an ombudsman would lead to increased prices for consumers.

“The remedies, if effectively enforced, are likely to lead to lower prices in some cases, like agricultural products,” said Clarke. “Even very small price reductions and other benefits are likely to result in consumer benefits far outweighing the modest cost of the ombudsman.”

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