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Last Updated: Tuesday, 22 March, 2005, 18:20 GMT
Supermarkets dodge abuse claims
Shopping basket
Little to complain about in the supermarket world?
Supermarkets are, by and large, sticking to the Supermarkets Code of Practice in the way they treat their suppliers, a report has concluded.

However, the Office of Fair Trading (OFT) said suppliers were reluctant to complain about any code breaches.

This lack of evidence made it difficult to assess how effective the code had been, the OFT said.

Campaigners have called for an independent watchdog to allow suppliers to complain in confidence.

'Close' relationships

The code was created to ensure that the big four supermarkets - Asda, Safeway, Sainsbury's and Tesco - treat their suppliers fairly.

The supermarkets have effectively written the rules
Vicki Hird, Friends of the Earth

The regulator ordered auditors to look at whether supermarkets violated the code, focusing on issues such as whether supermarkets were slow to pay suppliers or forced them to contribute to marketing costs.

The OFT found that most relationships between supermarkets and suppliers were good.

It also concluded there was no available evidence to suggest that the market for the supply of groceries was not working well for consumers.

Welcoming the OFT's findings, Tesco chief executive Sir Terry Leahy said: "We are pleased that the audit found no single instance of a breach of the code at Tesco."

It admitted that problems do arise, but said its close relationships with suppliers meant that these are "aired and usually resolved by constructive discussion".

'Too scared'

The OFT did say that it had been concerned about lump sum 'loyalty' payments that some suppliers had been required to make to guarantee future business.

The investigation found 44 incidents in which Safeway required payments and two similar cases involving Sainsbury's.

However, the watchdog said it was prevented from taking the cases further because suppliers did not complain to the supermarkets.

There is no evidence that loyalty payments have continued since Safeway's acquisition by Morrisons, the OFT said, and it added that the payments to Sainsbury's appeared to be isolated incidents.

We are keen for further evidence to inform our continuing scrutiny of the supermarket sector
Sir John Vickers, OFT chairman

Campaigners claim that suppliers are too scared to complain if the code is breached.

"It is hardly surprising that the OFT has been unable to uncover significant breaches of this flimsy Code of Practice," said Vicki Hird, senior food campaigner at Friends of the Earth.

"The supermarkets have effectively written the rules, and these require them to do almost nothing at all," she said.

This was an opinion echoed by business advisers Grant Thornton who agreed that the main problem with the code was that all the power lay with the supermarkets.

"We are constantly seeing examples of disproportionate power damaging suppliers," said Duncan Swift, head of Grant Thornton's Food & Agribusiness Recovery Group.

Cracking the code

Meanwhile, consumer and farming lobby - the Breaking the Armlock Alliance - said the code needed to be revised in order to work.

It has called for an independent watchdog which will allow suppliers to put forward complaints in confidence.

Under the current system, complaints from suppliers have to go through the retailer.

Critics said the code had also failed to protect overseas suppliers, adding that it was impossible to pay workers a living wage on some of the plantations supplying the UK market.

OFT chairman Sir John Vickers admitted it was difficult to tell whether the code had been effective or not due to a lack of evidence.

The code could only work "if evidence comes forward", he said.

"We are keen for further evidence to inform our continuing scrutiny of the supermarket sector," said Sir John.

The OFT studied a sample of 500 grocery supplier relationships with the big four supermarkets for its report.




SEE ALSO:
OFT probes online grocers bills
12 Dec 04 |  Business
Petrol sales boost Tesco turnover
25 Nov 04 |  Business
Sainsbury's makes first ever loss
17 Nov 04 |  Business
Waitrose snaps up Safeway stores
25 Mar 04 |  Business
Supermarket price war predicted
12 Jan 04 |  Business


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