The Office of Trading’s (OFT) review of the Supermarket Code of Practice’s first year in operation reveals that 80-85% of the 51 grocery suppliers that responded to the pre-report consultation believe the Code is not achieving its aims.
However, the OFT says such was the fear of identification that almost all the evidence of unfair practices was “anecdotal”, making it impossible for it to draw firm conclusions.
Nevertheless, despite views only being received from a relatively small number of organisations – 35 trade associations and 16 suppliers – the OFT says there is a “widespread belief” that the Code is not working.
Consequently, it now plans to audit the trading practices of Tesco, Asda, Sainsbury’s and Safeway itself via sample examination of supplier records.
Key concerns highlighted to date include late payment times, retrospective price reductions, insisting suppliers contribute to marketing costs, and demands for lump sum payments as a condition of supply.
Consultation respondents included “three organisations representing suppliers of tins, packets and boxes, plus two individual suppliers”.
Amidst what the OFT acknowledges is a “climate of apprehension”, not one case has gone to mediation and only one written complaint has been received since the Code’s inception. The organisation says it can “do little to address concerns under any Code, however rigorously drafted, if suppliers are not prepared to assert their rights”.
Packaging Federation ceo Ian Dent adds: “I have strong reservations that an audit will produce the evidence the OFT needs to recommend sensible changes. Suppliers must be directly involved, otherwise it will be relying on the supermarkets to solve the problem they are in fact causing. I am keen to hear from packaging companies wishing to discuss the issues confidentially.”
Charles Trotman, chairman of the Fair Deal Group which monitors supermarket treatment of suppliers, adds: “I can’t see a paper-based audit working – some supermarkets will simply cover their tracks. Only tough sanctions will stop supplier abuse.