Archived press release

Supermarket code sells out food suppliers

31 October 2001

“WEASEL-WORDED” CODE OF PRACTICE KEEPS SUPERMARKET ARMLOCK ON SUPPLIERS

The new Government Code of Practice for supermarkets - prepared in response to a Competition Commission report last year - has been published today. Yet again, the news has been sneaked out at short notice. The final version of the Code shows that moves to protect small suppliers and consumers from the damaging practices of large retailers have been significantly watered down, and offer little, if any, protection.

On 1st March this year, Tony Blair told farmers that “the supermarkets have pretty much got an arm-lock on you people at the moment”, and promised that it was “something we have got to sit down with them and work out”. The Competition Commission report concluded that the power exerted by major retailers enabled them to carry out practices against the public interest. The report found evidence that the biggest supermarkets [Asda, Safeway, Sainsbury,Somerfield and Tesco] “adversely affect the competitiveness of some of their suppliers with the result that the suppliers are likely to invest less and spend less on new product development and innovation, leading to lower quality and less consumer choice”.

The Competition Commission report listed specific measures which should be included in a Code of Practice which it stressed must be binding on the larger supermarkets. For example,paragraph 6(e) stated that “retailers should not request suppliers to contribute to retailers' cost of buyer visits, or any supplier to ... the retailer's cost of artwork or packaging design,consumer or market research, or to the cost of store refurbishment or opening, or to provide hospitality.” But the Code merely says (in paragraph 5) that “a supermarket shall not, directly or indirectly, Unreasonably Require a Supplier to make any Payment towards that Supermarket's costs of buyer visits ... artwork or packaging design, consumer or market research, the opening ... of a store, or hospitality for that Supermarket's staff” (our underlining)

Adrian Bebb, Food Campaigner at Friends of the Earth commented:

“This weasel-worded Code of Practice has been sneaked out in traditional New Labour fashion because it represents a surrender to the interests of big retailers, and a sell-out of the needs of their suppliers. This will not protect small farmers and food producers. It does not put the Competition Commission's report properly into effect. In short, it is not good enough. No wonder the Government hopes that no-one will notice.”

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Published by Friends of the Earth Trust