OFT's supermarket code audit proves a long wait for nothing

By Elaine Watson

- Last updated on GMT

Related tags: Asda, Wal-mart, Supermarket

OFT's supermarket code audit proves a long wait for nothing
Regulator fails to satisfy suppliers with review of trading code

The Office of Fair Trading (OFT) has effectively washed its hands of tackling supermarkets' troubled relationships with suppliers and called on the industry to put its own house in order.

While it has not ruled out launching a fresh investigation or making changes to the supermarket code of practice, the regulator's long-awaited report into compliance with the code said action was difficult to justify without clear evidence of market abuse by the supermarkets.

"If people don't provide us with hard evidence, it is hard to take concrete action, especially as the supermarkets are by and large complying with the code," said the OFT. It has invited further comments by May 31.

It also welcomed the National Farmers' Union plan to develop a buyers' charter, which would regulate the behaviour of buyers throughout the industry.

However, suppliers said the report betrayed a basic lack of understanding of trading relationships; many feared that speaking out could be commercial suicide. One sales director said: "This doesn't take us any further than the report the OFT put out last year calling for the audit [of the code]. In the meantime, the abuses are getting worse.

"Tesco is now resorting to telling suppliers that if they want to supply Netto, they should think very seriously about their future with Tesco. It's deplorable."

There was also little doubt that the quality of some products was deteriorating as retailers continued to pile on the pressure to cut prices, said one own-label supplier. "I was at a recent Asda trade briefing and [trading and marketing director] Angela Spindler told suppliers that Asda would never compromise on quality, although it wants better prices," he said. "There was a deathly silence in the room. You can't have it both ways."

Liberal Democrat agriculture spokesman Andrew George requested an urgent meeting with competition minister Gerry Sutcliffe to discuss the report. He said that suppliers were unsurprisingly scared: "Supermarkets have them by the short and curlies."

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