Page last updated at 18:17 GMT, Wednesday, 13 January 2010

UK supermarket ombudsman to be created

The big four supermarkets
The new code on supermarkets begins in February

A new watchdog is to be created to resolve disputes between supermarkets and their suppliers, the government has announced.

The ombudsman will enforce a new code of practice governing relations between grocers and suppliers. The code will come into force on 4 February.

A period of consultation will follow on how best to enforce it and who the ombudsman should be.

The move follows a recommendation from the Competition Commission in 2008.

The commission had spent two years investigating the supermarket industry.

Pressure on producers

It proposed that supermarkets should pay for the costs of running the watchdog.

The Department for Business, Innovation & Skills has said that the watchdog would cost £3.7m to set up, and then £1.3m a year to run.

"The power that large grocery retailers remain able to wield over their suppliers can still create pressures on small producers," Consumer Minister Kevin Brennan said in a written statement to Parliament.

"However the government is mindful of placing unnecessary costs on to business especially in a period of economic difficulty, which is why we plan to issue a consultation on how best to take matters forward.

"We do not anticipate a significant impact on consumer prices or workers resulting from the creation of an enforcement body," he added.

Indecision

The Conservatives called the move "too little, too late".

"Nearly two years after the Competition Commission recommended an ombudsman, the government has finally come to a decision," shadow business minister Mark Prisk said.

"But even now, ministers still can't decide when the ombudsman will be created, what powers it will have, and who will be in charge.

"Meanwhile consumers, farmers, and small shops will continue to lose out."



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