OFT to audit supermarkets in review of code of practice

The OFT's review of the Supermarkets Code of Practice, published today, found a widespread belief among suppliers that the Code is not working effectively.

However, the review found "no hard evidence" to support this opinion and the OFT will therefore commission further work to establish how supermarkets deal with suppliers under the Code.

Following a consultation with suppliers, their trade associations and Asda, Sainsbury's, Safeway and Tesco, 80 to 85% of respondents claimed the Code had failed to bring about any change in the supermarkets' behaviour.

Penny Boys, OFT Executive Director, said: "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."

Despite anecdotal evidence that the Code is not working, no cases have gone to mediation under the Code. Nor has the OFT received any detailed information from suppliers or trade associations about alleged breaches of the Code.

The OFT said that this had made it impossible to draw any firm conclusions as to how individual supermarkets are operating under the Code, though it is clear that widespread dissatisfaction amongst suppliers continues.

Fear of complaining was the main reason identified for the Code's perceived lack of effectiveness - 73% of respondents reported a fear of complaining amongst suppliers.

The four largest UK supermarkets have expressed a commitment to the Code and believe that relations with suppliers are generally good.

However, the OFT has no evidence from the supermarkets that their relationships with suppliers had changed significantly since the introduction of the Code.

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 (see note 7) 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.

The OFT review of the Supermarkets Code of Practice began on 17 February 2003.

(SP)