Government to create supermarket ombudsman

The government has announced it is to begin consulting on the creation of a body to oversee supermarkets’ relationships with suppliers.

Kevin Brennan, consumer minister with the department for business, innovation and skills, has accepted the Competition Commission's recommendation for an ombudsman to enforce the Groceries Supply Code of Practice, and will launch a consultation on the issue next month.

He said: “Free and fair competition is the key to a healthy market and it is right that there should be an enforcement body to make sure that consumers are getting the best value for money.”

Brennan said the creation of an enforcement body would not have a significant impact on consumer prices or workers. He said the consultation would not be looking at whether such a body is needed, but how it would operate.

The news has been welcomed by suppliers. Melanie Leech, director general of the Food and Drink Federation said: “We support the government’s decision to create a new body to oversee the Groceries Supply Code of Practice, which we believe will be of particular help for smaller businesses in the food chain. We look forward to working with the Government to ensure this new organisation operates as an effective, low-cost monitoring and enforcement body.”

NFU president Peter Kendall said the decision was the result of hard work and lobbying by the NFU over the past 10 years, including in-depth responses to both Competition Commission investigations.

“We’ve worked incredibly hard to make this a reality,” he said. “Although the consultation period means that farmers and growers will still have to wait for the introduction of an ombudsman, we can at last see light at the end of the tunnel. It is vital that, when the new strengthened code comes into force, we have a proactive and robust enforcement mechanism in place as soon as possible.
“This current investigation into the grocery market began in 2006. Ministers have taken the right decision and 2010 must be the year we begin to eradicate unfair dealing and protect investment and innovation in British agriculture for the benefit of consumers.”

However, the news was greeted with dismay from the British Retail Consortium, which represents the retailers. BRC director general Stephen Robertson said: “This would tip the balance of negotiating power in favour of multinational manufacturers, allowing them to drive up the prices customers pay.