Archived press release

Clamp-down on supermarket bullies long overdue

30 April 2008

Responding to the Competition Commission's report on supermarkets published today (Wednesday 30 April 2008) Sandra Bell, supermarkets campaigner for Friends of the Earth, said:

"This report confirms that the `big four' supermarkets are the bully boys of the retail sector - bleeding suppliers dry and reducing shoppers' choice.

"Urgent action is now needed to end the unfair treatment of farmers and suppliers - these remedies cannot be left up to the supermarkets to weaken then sign up to. The supermarket watchdog needs to be appointed by Government and it needs teeth

"The Commission's report misses the opportunity to support local shops and choice-its competition test does not go far enough to stop the Tesco takeover and the Commission has done nothing to recreate vibrant shopping communities for local people."

Notes

Friends of the Earth's analysis of the final report:

Good news for farmers and suppliers

The Competition Commission has committed to toughening up the Supermarket Code of Practice, in particular to stop supermarkets from changing agreed terms.

But…

Supermarkets must not be allowed to influence the final wording of this Code of Practice. They have now twice been found guilty of treating their suppliers unfairly - first in 2000 and again in this inquiry. Following the last inquiry in 2000 supermarkets were allowed to weaken the remedy - the Supermarket Code of Practice - so much that it became ineffectual. This must not happen again.

More good news for farmers and suppliers

The CC has confirmed that a watchdog (ombudsman) is needed to police the Code of Practice.

But…

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.

If the supermarkets don't agree to the appointment the responsibility will lie in the hands of the Department for Business, Enterprise and Regulatory Reform. The watchdog needs proactive powers of investigation and must be able to take complaints from primary producers like farmers, and overseas suppliers. It must be able to monitor practices not covered by the Code and have the power to amend the Code when necessary - otherwise retailers will simply find new ways to extract harsh terms from their suppliers. With so many farmers struggling to stay in business it is vital that they are properly protected.

Bad news for our high streets

The Competition Commission has failed to do anything to halt the takeover of our high streets by the big four supermarkets. It has not introduced any measures to help local shops despite finding that independents pay more for the same goods making it harder for them to compete, and that vital local businesses such as greengrocers and street markets close down when supermarkets open .

Even its proposed Competition Test is more about choice between the big supermarkets. And unless it is made stricter it will still allow the phenomena of Tesco Towns - under current proposals one supermarket can have 60% of local market share and smaller formats like Tesco Express and Sainsbury local would be exempt.

What needs to happen now?

The Competition Commission must impose a stronger Code of Practice on the supermarkets that prohibits retrospective changes to agreed terms and other unfair practices - the supermarkets must not be allowed to weaken the Code as they did following the last inquiry. Suppliers must also have a say on the wording of the Code.

The Government must appoint an independent Ombudsman to oversee the Code but also with proactive powers to investigate wider issues arising between supermarkets and their suppliers and to deal with any new unfair practices which emerge.

The Government must consult on the introduction of a Competition Test covering both its criteria and operation.

The Government must introduce new planning policy for town centres which positively supports diverse retailing, sustainable patterns of development and thriving local communities and clamps down on the relentless growth of out of town supermarkets.

If you're a journalist looking for press information please contact the Friends of the Earth media team on 020 7566 1649.

Published by Friends of the Earth Trust