Ben Garside IIED 

The UK Competition Commission's final report reeased on 30th April says that suppliers directly in contact with the supermarkets are transferring excessive risks and unexpected costs further up the supply chain.

In response, it has recommended a strengthened and extended Groceries Supply Code of Practice and the establishment of an independent Ombudsman, to govern the way retailers deal with their suppliers.

The main recommendations are:

• a recommendation for the inclusion of a ‘competition test' in planning decisions on larger grocery stores
• action to prevent land agreements which can restrict entry by competitors;
• the creation of a new strengthened and extended Groceries Supply Code of Practice to cover all retailers with annual turnover greater than 1 billion GBP.
• a recommendation to establish an independent Ombudsman to oversee and enforce the Code.

Criticisms of the report include that it has declined to enable "creative and manufacturing" suppliers to be able to get redress for decisions made by supermarkets which directly impact them, because they say this was outside its terms of reference.

"That omission has left millions of small producers, primarily farmers, vulnerable to continuing to have the risks passed onto them", says Traidcraft. "Without the means to right any wrongs against them, the appalling behavior of transferring risk up the supply chain to those most vulnerable - a practice which the Commission report acknowledges takes place - will continue," said Fiona Gooch, Traidcraft Senior Policy Advisor.

ActionAid however have welcomed the findings: "The Competition Commission's recommendations are good news for the millions of poor workers, mainly women, around the world who produce and pack goods for the big four supermarkets. Faced with a crisis over global food supplies, the need for an ombudsman - a supermarkets watchdog - to ensure a fair and sustainable food chain is greater than ever. Supermarkets must play fair. If they reject the appointment of an ombudsman, the government must step in and impose one" said Dominic Eagleton, policy analyst at ActionAid.

The UK National Farmers Union (NFU) has also had a positive response. Commenting on the Commission's findings, NFU President, Peter Kendall said: "We're pleased that, after such an exhaustive investigation, the Commission 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

The Commission has also suggested that Defra and the Department of Business, Enterprise and Regulatory Reform should consider the introduction of appropriate measures, including the extension of the GSCOP and the role of the ombudsman or the introduction of similar measures, to cover farmers supplying processors and other intermediaries.

"The Department for Agriculture and Rural Affairs, and the Department for Business Enterprise and Regulatory Reform, must act now to extend the role of the Ombudsman so that all people working in the grocery sector supply chain are treated fairly. We welcome the establishment of an independent Ombudsman but for the role to be a sufficient deterrent to stop anti-competitive practices by retailers, it needs to be able to compensate suppliers appropriately and fine retailers at a proportionate level for non-compliance. And customers and shareholders should be told when the Ombudsman discovers violations," says Traidcraft.

Friends of the Earth are also concerned: "the Competition Commission has recommended a narrow remit for the Ombudsman - simply overseeing the Code of Practice, which the supermarkets will be asked to voluntarily agree to. We could be left with a watchdog without teeth."