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Last Updated: Wednesday, 3 August 2005, 17:14 GMT 18:14 UK
OFT supermarket ruling draws fire
Vegetables in a UK supermarket
The voluntary supply code for supermarkets was set up in 2002
There is no need for UK supermarkets to change how they deal with suppliers, a government watchdog has ruled.

Farmers' groups, organic organisations, and aid agencies had asked the Office of Fair Trading (OFT) to investigate the existing voluntary code.

They had accused supermarkets of being slow to pay suppliers, and having a stranglehold on the supply chain.

The OFT's decision not to change the voluntary Supermarkets Code of Practice "beggars belief", one supply body said.

'Hard bargaining'

As well as expressing shock at the decision, Breaking The Armlock - a consortium of farmers' groups and organic producers - renewed calls for OFT action.

"What we need is an independent watchdog and a moratorium on further takeovers by the big four supermarkets," it said.

Consumers are benefiting from competition in grocery retailing, and evidence has not come forward that the code is being breached
Office of Fair Trading

"What we have got is a supermarket-friendly report which leaves farmers and independent shops hanging out to dry."

However the OFT rejected calls for an independent ombudsman to deal with suppliers' complaints.

And it added that the current way of doing business was "not designed to shield suppliers from hard bargaining driven by supermarket competition".

"Consumers are benefiting from competition in grocery retailing, and evidence has not come forward that the code is being breached, " said the OFT.

There is nothing fair about the decision to ignore the concerns of farmers, consumer groups, environmental organisations and development agencies
Action Aid

It had asked auditors to examine whether the big four of Tesco, Asda, Sainsbury's, and Safeway (now taken over by Morrisons) were violating the code, which was set up in 2002 to clarify the way they dealt with suppliers.

Mediation process

No disputes between suppliers and supermarkets have gone to mediation since the code was established three years ago, with critics saying this is because suppliers risk having their contracts cancelled if they complain.

But the British Retail Consortium, which represents supermarkets, said "supermarkets (are) observing the code, but suppliers are not making use of it".

However charity Action Aid said the OFT ruling "made a mockery" of its claim that it ensures fair dealing between the UK's biggest food retailers and their suppliers.

"There is nothing fair about the decision to ignore the concerns of farmers, consumer groups, environmental organisations and development agencies," it said.

Action Aid has tried to highlight what it says are the poor conditions of casual farm workers at some supermarket suppliers overseas.




SEE ALSO:
Supermarkets 'hurt UK business'
23 Jun 05 |  Business
Farmers make appeal for watchdog
01 Jun 05 |  Scotland
Price cuts raise retail pressure
04 Apr 05 |  Business
Supermarkets dodge abuse claims
22 Mar 05 |  Business
Supermarkets defend food sourcing
03 Mar 05 |  Business
Greens call for supermarket code
25 Nov 04 |  Scotland


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