The UK Competition Commission has claimed the supermarket code of conduct governing retailer-supplier relations is “not effective”.
As part of its ongoing investigation into competition in the grocery sector, the UK governmental watchdog has said that a number of issues raised by its previous inquiry into the sector in 2000 are still proving problematic.
These include the supermarkets’ use of buying power to force suppliers to provide concessions or payments in exchange for shelf space and to impose conditions relating to suppliers trade with other retailers.
In order to combat such barriers to competition highlighted by the 2000 inquiry, a supermarket code of practice was established. However, the Commission’s current investigation has found the code to be ineffectual.
“Our review of the supermarkets code of practice and the supply chain practices of grocery retailers indicates that many of the practices that were identified in the 2000 investigation continue to be carried out,” the Commission said.
“We are currently of the view that many, although not all, of the practices identified in 2000 are likely to have an adverse effect on competition. This is primarily as a result of the uncertainty created for suppliers and the consequent adverse effects on investment and innovation.
“We are also concerned about possible barriers to entry for small suppliers and consequent impacts on innovation and product choice for consumers.”