Supermarket ombudsman gets government go-ahead

25-01-2010
The British Government has announced it will set up a supermarket ombudsman to protect suppliers from abuses of power by the big retailers.

But while the long-awaited announcement by Consumer Minister Kevin Brennan was hailed as a "victory for commonsense and consumers" by the NFU, his statement fell short of delivering a definitive outcome on this protracted debate.

Brennan said he had accepted the Competition Commission's recommendation for a body to enforce the Groceries Supply Code of Practice which comes into force on February 4.

But crucial details about the make-up and scope of the new body will not be resolved until after a further public consultation has taken place, starting in February and probably lasting three months.

It is likely to outline two broad options - creating a new independent, stand-alone body, or setting the ombudsman up as a unit within the Office of Fair Trading, as the Conservatives pledged to do, if they win the general election.

A spokesman for the Department for Business, Innovation and Skills (BIS) said further consultation was necessary to "make sure we get it right" on this "highly complex issue". He said BIS was particularly keen to ensure the ombudsman did not add extra burdens to retailers, while ensuring suppliers were protected and consumers received value for money.

Brennan said the revised Grocery Supply Code of Practice "is a great improvement on the current regime".

"However, the power large grocery retailers remain able to wield over their suppliers can still create pressures on small producers, especially in these difficult economic times, which ultimately may impact on consumers.

"Free and fair competition is the key to a healthy market and it is right that there should be an enforcement body to make sure consumers are getting the best value for money."

Responding to claims by a furious British Retail Consortium that an ombudsman would lead to higher prices for consumers, he said: "We do not anticipate a significant impact on consumer prices or workers resulting from the creation of an enforcement body."

Despite the lingering uncertainty, the announcement has been hailed as a major victory for the farming sector and supermarket suppliers, following 10 years of lobbying led by the NFU and UK farming unions with some unlikely allies, such as Friends of the Earth and ActionAid.

Defra ministers and officials have also played a vital role in recent months in persuading key figures across government to take this line, despite fierce opposition from retailers.

Defra Secretary Hilary Benn said the new ombudsman "will help strike the right balance between farmers and food producers getting a fair deal, and supermarkets enabling consumers to get the high-quality British food they want, at an affordable price".