OFT to review Supermarket code
Suppliers asked for comments
February 17 2003
The UK Office of Fair Trading is to review the Supermarkets Code of Practice, one year after its launch.
The code was implemented following the Competition Commission report on the supermarket sector in 2000, which recommended a code of practice to clarify relations between supermarkets and their suppliers. Suppliers had long argued that the buying power of the major supermarkets made price negotiations one-sided.
The government committed the OFT to an annual review of the code, focusing in particular on dispute resolution.
The OFT said it is writing to suppliers and supermarkets asking for views on the code and how it has been working in practice by March 28. At the end of the review, the OFT will report “on whether the code is working effectively and whether it should be changed.”
The OFT stresses that the review is a separate issue to the sale of Safeway, which it is also currently considering. However, the code applies directly to most if the major players in the Safeway saga, covering supermarkets with a market share higher than 8 per cent. That takes in Asda, Sainsbury and Tesco, all potential bidders, as well as Safeway itself. The code does not cover non-food sales.
Ironically, the OFT has received no complaints under the code in its first year of operation, but is concerned this may reflect supplier concern over loss of business if they flag up breaches.
Lucy Neville-Rolfe, Tesco corporate affairs director, said: “This was expected as the government response to the Curry Report committed the OFT to review the code annually. We have always supported the supplier code of conduct and have trained our buyers in its operation. So far we have had no complaints under the code. We look forward to helping the OFT in any way we can.”
