The UK Competition Commission published its long awaited (and voluminous) report on the UK supermarkets on October 9. Although the press headlines were dominated by the Commission’s clearance of the supermarkets’ alleged abuse of monopoly power the recommendations of the Commission regarding a new mandatory code of practice for relationships with their suppliers are significant for UK farmers. In a 12 point list of recommended provisions for the code of practice the supermarkets are advised to stick to a reasonable set of rules when dealing with their suppliers.
Importantly for the pig industry in the UK, the Commission also found that Asda, Morrison and Somerfield engage in the practice of selling products whose labels indicate that the products are of UK or British origin when the consumable originates from overseas. The Commission concluded that this practice, when carried out by any of the multiples with buying power adversely affects the competitiveness of some of their suppliers and distorts competition in the supply of groceries by forcing some suppliers to compete on more onerous terms than others and by distorting consumer choice of products. The Commission noted in its report that labelling complaints against supermarkets came mainly from suppliers of pigmeat and their findings are a significant victory for UK producers. The Commission’s remedy for the mislabelling practices of the supermarkets is to rely on the MAFF’s initiative to prevent the misleading use of descriptions of goods implying UK origin. As the Commission says, “We are confident that MAFF will monitor the effectiveness of any measures taken”.
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The Competition Commission report was unlikely to produce a black and white answer and there are a number of shades of grey in the Commission’s three volume 1200 page report (reputed to have cost £4 million to produce). Nevertheless, some supermarket buyers will have a shock when they realise that the mandatory code of practice stops them varying their terms without giving advance notice to suppliers.
The UK pig industry was in the forefront of those complaining to the Commission about abuse of labelling and has scored a direct hit with the Commission’s conclusion that this practice exists – and is bad for producers and consumers. Pig producers may now want to insist that provisions to avoid misleading labelling are rolled into the proposed code of practice so that they do not have to rely on the MAFF to monitor the situation post hoc.
