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GOVERNMENT FAILING TO BRING SUPERMARKETS TO HEEL - FARRON

April 1, 2009 11:27 AM

The UK food market will continue to be dominated by a "trolleygarchy" of powerful supermarkets unless the Government clamps down on this monopoly of interests by introducing a proactive Independent Regulator to monitor fair pricing according to Liberal Democrat Defra Spokesperson Tim Farron MP.

Mr Farron was speaking after information uncovered by the Liberal Democrats through the Freedom of Information Act revealed that Defra officials have only met with one of the "big four" supermarkets in the last two years to discuss the creation of the Groceries Ombudsman proposed by the Competition Commission. This meeting was at the request of Sainsbury, who have stated on record during their submission for the consultation for the creation of a new Grocery Code of Practice, that they "do not believe the creation of a supermarket ombudsman to be necessary."

In April 2008, the Competition Commission published their final recommendations on the groceries sector. Amongst other measures, the CC recommended relying upon the sector voluntarily agreeing to a code of practice and an ombudsman to enforce compliance with the code. Only if that approach failed should Government become involved:

Figures obtained through a parliamentary question by Mr Farron revealed that the initial cost for establishing a Supermarket Ombudsman would comprise of £3million retailer costs and £0.9 to £2.4million costs for the Office of Fair Trading. A question tabled by Tim's Liberal Democrat colleague Andrew George MP, also revealed that there had been no discussions between Defra and officials from DBERR, the Government Department responsible for setting up the Ombudsman.

The Liberal Democrats have accused the Government of failing to bring the big supermarkets to the negotiating table and have proposed introducing a more proactive Supermarket Regulator with the power to break up the supermarket stranglehold over Britain's food industry.

Commenting Mr Farron said:

"The Competition Commission's initial recommendation was to create a voluntary Ombudsman to monitor supermarket pricing, but given the power these supermarkets yield it's going to take more than good intentions to break up such a powerful monopoly of interests.

"How can self-regulation be the answer when the big supermarkets have gone on record as saying that they don't believe an Ombudsman is needed? A voluntary approach could only have worked if the Government was prepared to bring the big supermarkets to the negotiating table. Clearly this isn't the case.

"Although DBERR have the overriding responsibility for creating the Ombudsman, Defra have only had one meeting with supermarket officials to discuss setting up an Ombudsman in the last two years. The fact that the meeting was at the request of the supermarket tells you all you need to know about how much of a priority Defra considers food pricing to be.

"It would take just under £6million to set up an Independent Regulator to break up this supermarket 'trolleygarchy'. Instead of continuing Labour's policy of letting supermarkets cut prices by cutting farmers profits, the Lib Dems would ensure both farmers and consumers get a fair price for food by creating a legally binding supermarket code, enforced by a powerful proactive Food Market Regulator."

Notes:

Retailers are being asked to contribute around 0.005 per cent of their annual turnover to get the ombudsman off the ground. Based on 2007 accounts, it would cost:

Tesco - £1.63m

Sainsbury's - £0.82m

Asda - £0.83m

Morrisons - £0.59m

The same level of contribution from a farmer's average income equates to £2.25 a year.

1. Parliamentary Question tabled by Tim Farron MP

http://www.theyworkforyou.com/wrans/?id=2009-03-03b.257434.h&s=Tim+Farron#g257434.q0

2. Parliamentary Question tabled by Andrew George MP http://www.theyworkforyou.com/wrans/?id=2008-11-24f.238503.h&s=Andrew+George+AND+grocery+sector+department%3AEnvironmentFoodandRuralAffairs#g238503.q0