Tesco to back plans for supermarket ombudsman
July 21, 2008
The UK’s biggest supermarket Tesco is set to back calls for legislation to create an ombudsman if the top 10 grocers refuse to accept such authority voluntarily.
Tesco’s chief executive, Sir Terry Leahy and his counterparts at Asda, Sainsburys and Iceland will be given an updated code of conduct and they will be faced with an ombudsman to monitor their treatment of suppliers.
The decision to introduce an ombudsman could be delayed as the grocers are unlikely to agree on how much power the regulator should have. A spokesman for Sainsburys indicated that they could fight the move as “an unnecessary measure.”
Last Tuesday a meeting was held by the Cross Cutting Remedies Group at the House of Commons along with other industry ombudsman, government officials and lobbyists to discuss the problems. The meeting was chaired by Liberal Democrat MP Andrew George. The group wants the Department for Business, Enterprise and Regulatory Reform to threaten legal action if the supermarkets refuse to sign up to the scheme.
A Tesco spokesman said “Unless everyone in the industry can agree to sign up to the proposal, we believe that it would require legislation. We work hard to ensure that we have good relations with our suppliers, and more than 1,500 of our suppliers have been with us for five years or more.”
Mr George said he wanted the department to introduce legislation when it makes its response to the report. He said “If supermarkets want to be obstructive, then we would require primary legislation”.
The group would like the supermarket ombudsman to be “proactive”, a source revealed, so that he or she could investigate suspected poor practice rather than just responding to official complaints. The source also said that suppliers lived in a “culture of fear” that prevented them voicing their opinion or grievances in case they lose big contracts with the supermarkets.
Sainsburys said in a statement “We believe that the creation of an ombudsman to look into relationships between suppliers and retailers is an unnecessary measure and that issues should be addressed through the proposed changes to the existing code of practice.”
A spokeswoman for Asda said they were “agnostic” about the ombudsman but warned the intervention could drive up costs “It would be ironic if the end result of introducing an ombudsman was to force up prices … at a time when household budgets are being stretched and inflation is at its highest level for years”.
The Competition Commission has set a deadline of next January for supermarkets to agree. If they fail to agree on terms, it will recommend legislation.
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