Mounting opposition from UK supermarkets to the Competition Commission’s proposal to establish an ombudsman could delay, or even scupper, its formation.
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As part of last year’s review of competition in the UK grocery market, the CC called for the creation of an independent body to oversee the relationship between retailers and their suppliers.
However, one industry insider told just-food, the UK’s multiples are concerned that the ombudsman could be an “unnecessary burden” to retailers navigating the economic downturn and rapidly changing consumer spending patterns.
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By GlobalData
A major bone of contention, the source suggested, was the fact that the supermarkets would be required to fund the body themselves.
“The cost of the ombudsman will be reimbursed from retailers using a formula which will take into account the size of retailers as well as the number of complaints involving them and requiring resolution,” a spokesperson for the CC confirmed today (22 May).
However, the spokesperson insisted: “The overall cost will be tiny compared to the size of the UK groceries market and the retailers’ turnovers and so it’s exaggerating to start talking about a noticeable effect on food prices.”
In order to establish the ombudsman, the CC requires the consent of UK retailers. To an extent, therefore, the competition watchdog has tried to address the industry’s concerns during its consultation process, the spokesperson said.
“However, there is always going to be limit to how much you can accommodate these concerns before you start undermining the very purpose of the ombudsman,” he added.
If the CC fails to obtain the agreement of the multiples, the spokesperson said that it will pass a request to form the ombudsman to the UK Department for Business, Enterprise & Regulatory Reform (BERR).
“If retailers won’t agree then we will recommend to BERR that they take action themselves to establish the ombudsman.”
BERR has powers to establish the body on a mandatory basis.
