UK Competition Commission calls for ombudsman to regulate supermarkets

In what is seen as a blow to the Big Four supermarket chains, the Competition Commission has come down on number of dubious practices. It has called for an ombudsman to enforce a code of conduct to curb their power in the £100 billion-a-year UK groceries market.

The Commission has said that its two year inquiry has unearthed evidence that if suitable checks were not placed on the practices, supermarkets would end up harming shoppers by squeezing suppliers of their margins to such an extent that suppliers would be forced to cut investment in new lines and products.

In emails from store buyers it seized in the investigation, the commission found evidence of foul language towards suppliers with demands for retrospective discounts. The commission also found that buyers demanded payment for post-delivery lost or damaged stock.

The Competition Commission has come out with the formal recommendation after supermarkets failed to agree on a voluntary arrangement.

The Commission said that it is left with no alternative other than to set out a new Code of Practice and recommend that the Department for Business, Innovation and Skills (BIS) set up the Ombudsman to oversee its operation.

The ball is now in Business Secretary Peter Mandelson's court who will need to decide whether to go ahead with the recommendation which has been oppose by  the Big Four store chains, Tesco, Asda, Sainsbury's and Morrisons.