Retailers hit back

The CC says the recommended measures would improve consumer choice and protect suppliers, but supermarkets argue that consumers could end up paying the cost of running the scheme.

The supermarket ombudsman would oversee a stronger code of practice that would cover all grocery retailers with a turnover greater than £1bn. It would investigate any complaints made by suppliers against supermarkets, and the CC recommends that it could have the power to "levy significant financial penalties" on retailers if they do not comply with the ombudsman's findings.

Crucially for suppliers, it will accept confidential information about retailers, to try to encourage suppliers to come forward with complaints.

NOTHING TO FEAR

"Retailers with good practices and relationships should have nothing to fear," the regulator said.

But Asda and Sainsbury's have expressed concern about the cost of setting up and running the ombudsman scheme - a cost, they warned, that could be passed on to the consumer.

Andy Bond, Asda's chief executive, says: "It's clear that supermarkets like Asda deliver a good deal for their customers and, after yet another exhaustive investigation, the CC has again reached the same conclusion.

"While we welcome its proposals to improve local competition, and improve the relationship between retailers and suppliers, the bottom line is that any changes to how the market works must help us to lower prices and deliver a better deal for customers.

He adds: "The CC's proposals on the new code and an ombudsman could cost the industry hundreds of millions of pounds, leading to higher prices for customers, which will hit families hard at a time when they are already feeling the pinch. We strongly believe the ombudsman should act as a mediator to resolve disputes rather than diving straight into binding arbitration, and should remain focused on the interests of the consumer.

"We look forward to discussing the precise remit with the CC, so that we end up with an ombudsman that promotes effective competition, and doesn't dampen it."

However, Sainsbury's put a positive spin on the news. It said the CC's final report signals the end of a two-year inquiry, which has confirmed that UK supermarkets are providing a good deal for consumers.

"This is consistent with the significant improvements our customers have experienced in product quality, availability, service and price over recent years," said the company in a statement. "The CC has recommended that a competition assessment should be introduced into the planning system. Sainsbury's has argued for this for new stores throughout the inquiry, to protect local markets from exploitation in the future."

However, like Asda, Sainsbury's believes the creation of an ombudsman to look into aspects of relationships between suppliers and retailers is an unnecessary measure and that issues should be addressed through changes to the existing code of practice.

But the farming community was much more fulsome in its praise of measures put forward by the CC. Peter Kendall, president of the National Farmers Union, said: "We're pleased that, after such an exhaustive investigation, the CC has supported our long-held view that the food retail chain is not functioning as it should and, if left unchecked, could have an adverse effect on consumers.

"A strengthened mandatory code of practice, backed by a proactive ombudsman, which the NFU recommended, is exactly what is required to help develop a framework of improved transparency and fairness in the food supply chain.

"It is in everyone's interests that the food supply chain is transparent and profitable, so that farmers and growers are able to supply the quality and choice that consumers expect and deserve."

PLANNING FUDGE

However, when it comes to the planning process and campaigners' arguments that the multiples were holding on to undeveloped land to prevent rivals entering that local market, the CC seems to have fudged the issue.

In one part of the report, it says it wants a competition test to the planning process, which would be overseen by the Office of Fair Trading, and, later in the report, it believes that it is for local authorities to sort out with guidance from itself. So it is not all bad news for the supermarkets, particularly those with large landbanks, such as Tesco. l

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