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February 27, 2009

UK: Commission grocery code “a perverse path” – Asda

Asda has said the UK government’s plans to introduce a code of practice to govern relations between the country's supermarkets and suppliers would be a “perverse path to follow”.

Asda has said the UK government’s plans to introduce a code of practice to govern relations between the country’s supermarkets and suppliers would be a “perverse path to follow”.

The UK’s Competition Commission yesterday (26 February) announced plans to introduce a code of practice to ensure the fair treatment of suppliers and address issues hindering competition in the market.

In its investigation into competition in the UK’s grocery sector last year, the CC said that a code of practice was required to control the buying power of certain supermarkets.

The new Groceries Supply Code of Practice is an amendment to the existing code that the Commission hopes will prevent supply chain practices that transfer excessive risks and unexpected costs to suppliers.

“Whilst we found out that the existing code of practice had its uses and certainly did control the behaviour of the people who had signed up to it, given what we heard during the enquiry, particularly from suppliers about their relationship with retailers, we felt there were a couple of things that could do with being strengthened in certain areas and being clarified,” Rory Taylor, a spokesperson for the Commission told just-food.

“It might be in everyone’s interest in the industry if this point is addressed otherwise we might be coming back to it and I don’t think anyone wants that.”

Asda, however, believes the code represents a mandate for “poorly-run companies to sneak through price rises at the expense of its customers”.

“Good manufacturers will lose out as they can’t rightfully replace the poor ones. If this is allowed to happen the recession will be both deeper and longer heaping unnecessary pain and anguish on millions of families,” a spokesperson told just-food. “In the middle of a recession this seems a perverse path to follow.”

When contacted, Sainsbury said the previous report, published last April, confirmed that UK supermarkets are providing a “good deal for consumers”.

“We are now examining the draft order in detail and will continue to play a full part in discussions with the CC and other parties, to ensure that the code of practice works towards improving choice and value for consumers across the UK,” a spokesperson said.

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