New supermarkets code gives added protection to suppliers

February 27, 2008 |

The strengthened Supermarkets Code of Practice proposed by the Competition Commission on 15th February could prohibit a number of practices considered by the watchdog to be detrimental to consumers.

Measures include:

• Banning retrospective changes to agreed terms of supply

• Requiring retailers to make further improvements to their dealings with suppliers through the appointment of an in-house code compliance officer, keeping better records of contracts with suppliers and automatic notification to suppliers of contractual terms and their right to complain and seek arbitration of disputes.

The new ombudsman proposed by the commission would have the power to arbitrate on disputes under the code of practice, gather information following complaints from suppliers and producers and investigate breaches of the code.

The commission said it was "concerned about the ability of grocery retailers to transfer excessive risk and uncertain costs to suppliers through various purchasing practices, such as retrospective changes to supply agreements."

It added: "The CC considers that these practices could damage investment and innovation in the supply chain to the ultimate detriment of consumers."

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