The UK Office of Fair Trading’s review of the Supermarkets Code of Practice has found a widespread belief among suppliers that the code is not working effectively.
The OFT found no hard evidence to support this, however, and has therefore commissioned further work to establish how supermarkets deal with suppliers under the code.
Following a consultation with suppliers, their trade associations and the UK’s big four retailers, Tesco, Wal-Mart’s Asda, Sainsbury’s and Safeway, 80 to 85% of respondents claimed the code had failed to bring about any change in supermarkets’ behaviour.
However, the OFT said it has not received any detailed information from suppliers or trade associations about alleged breaches of the code, making it impossible to draw any firm conclusions as to how individual supermarkets are operating under the code.
Fear of complaining was the main reason identified for the code’s perceived lack of effectiveness, with 73% of respondents reporting a fear of complaining amongst suppliers.
Given the reluctance of suppliers to provide specific evidence of alleged breaches of the code, the OFT intends to obtain information from the supermarkets by conducting a focused compliance audit of each of the four supermarkets’ dealings with suppliers.
The audit will involve a sample examination of the supermarkets’ records of dealings with their grocery suppliers, focusing particularly on the clauses of the code where claims of breaches were more frequently identified by suppliers.
“Our review has shown that dissatisfaction among suppliers with the Supermarkets Code continues. The purpose of the audit is to enable the OFT to establish hard facts about the supermarkets’ compliance with the code. This is necessary to assess the suppliers’ concerns. We will then be in a better position to decide on any further action,” said Penny Boys, the OFT’s executive director.