Archived press release

Supermarket code

8 May 2001

The new supermarket Code of Practice, meant to protect small suppliers and the public from the damaging practices of big retailers, is in fact to be agreed with the supermarkets with no consumer or public input, Friends of the Earth revealed today.

FOE, with an alliance of public interest and farming organisations including the National Federation of Women's Institutes and the Women's Food and Farming Union, has written to Trade and Industry Minister Stephen Byers demanding that the Code of Practice is opened to public scrutiny.

Despite the far-reaching implications of the way in which supermarkets deal with their suppliers, there has been no consultation with consumer or public interest organisations -and there is no intention to hold any [1]. Some groups representing small farmers were also excluded from the consultation, despite the fact that the Code is meant specifically to protect them [2].

The Competition Commission found that the majority of the practices engaged in by the major supermarkets in dealing with their suppliers were “against the public interest”. They concluded that these practises resulted in “reduced investment, product development and innovation” and “lower quality and less choice for consumers”. The Competition Commission also highlighted the likely loss of smaller retailers as a result of the buying power of the big five supermarkets. It recommended that a Code of Practice be drawn up to protect suppliers and set out a draft of what the Code should cover. FOE obtained a draft of the Code in March. It had been substantially watered down from the version set out by the Competition Commission [3].

Friends of the Earth is concerned that, if the Code of Practice is weakened in order to gain agreement from the big supermarkets, it will simply give legitimacy to the existing practices. The practises identified by the Competition Commission include late payment, threats of delisting if suppliers don't lower their prices, demanding contributions from suppliers to supermarket promotions, and threats to suppliers if they continue to supply other outlets in competition with the supermarket at lower prices. The practices are likely to be even more widespread than is reported by the Competition Commission - one supplier said that it would be “commercial suicide for any supplier to give a true and honest account of all aspects of relationships with retailers”.

Commenting, FOE food campaigner Sandra Bell said:
“This so-called Code of Practice is nothing more than a stitch-up. Consumers,and the wider public interest have been cut out of any involvement in developing this important Code of Practice.

Consumers will lose out if more small suppliers, including farmers, and small shops go out of business. And there are wider environmental implications as our food chain becomes more and more concentrated in the hands of big business. Food will travel further and our countryside change its character if more and more small farmers go to the wall. If the Government continues this hole in the corner deal with supermarkets, they will be failing farmers,consumers, and the countryside.”

NOTES TO EDITORS:

[1] A list of organisations which have been sent a copy of the draft Code was listed in response to a Parliamentary Question from Colin Breed MP on 14th March. The Office of Fair Trading has told FOE that they will not be sending the draft Code out for wider consultation. The National Federation of Women's Institutes were even told that the draft Code was not a public document when they requested a copy.
[2] e.g. Family Farmers Association and Small and Family Farmers Association were not included on the consultation list.
[4] Details available from Friends of the Earth including copy of the draft Code of Practice

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Published by Friends of the Earth Trust