Key Commentators respond to OFT’s supermarket probe: Terry Jones

“The Uk grocery market is fiercely competitive and as supermarkets fight for customers, competing on price, quality and service, this will inevitably impact on the supply chain.

“However, the primary issue is not market power itself, but what happens when it is abused, which can lead to unfair treatment of suppliers.

“Farm business who have been treated unfairly at the retail/supplier interface in the past, in sectors such as fresh produce, still fear complaining about such treatment to the OFT as they believe this could result in partial or even complete loss of business.

“While the OFT’s report finds little evidence of explicit breaches of the code, it recognises its limitations. This only seeks to reinforce the NFU’s long-held view that we need a strengthened code as the existing code has afforded first-tier suppliers little protection and in addition, there is growing evidence of unreasonable behaviour by some of the smaller retailers not covered by that code.

“With few farming businesses having direct trading relationships with the multiples, there is a real need to have protection for the whole chain.

“The NFU’s idea of a Buyer’s Charter was welcomed by the OFT report. We feel that this more dynamic and responsive code will cover all of the retail and food service supply chains back to the farm gate, rather than just covering a proportion of the market and first tier supplier relationships.

“Participants would be required to have contracts and mechanisms for dispute resolution in place whilst independent audits would make it easier to uncover bad practise. By providing a clear framework within which to work, buyers and sellers would have a clear understanding of what is expected from each party.

“The NFU has already had discussions with government and industry about the Buyers’ Charter and how it may be progressed. These will now be followed up to find a way forward that will hopefully ensure profitable and ethical business practises can be developed between supply chain partners both small and large.”

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