Competition Commission urges supermarket ombudsman

The Competition Commission (CC) has formally called on the Government to establish a grocery ombudsman.

The move comes after the commission failed to reach agreement with the UK's biggest supermarkets on the voluntary introduction of an ombudsman, to arbitrate in disputes between retailers and suppliers.

The proposed regulator would operate under the commission's new Groceries Supply Code of Practice (GSCP), created on the recommendation of its inquiry into the grocery market last year.

Retailers with groceries turnover in excess of £1 billion per year would be given six months to comply with the new regulations, which will prohibit the making of retrospective adjustments to terms and conditions of supply, and require retailers to enter into binding arbitration to resolve disputes with suppliers.

It would also become compulsory to keep written records of agreements with suppliers.

Having outlined a need to improve competition between retailers in local areas, the commission is also working on a draft order of measures to prevent exclusivity arrangements.

Commission chairman Peter Freeman said: "Our inquiry clearly revealed problems that require action and which, if left unchecked, would damage the consumer. The current economic difficulties if anything reinforce rather than reduce the need for action.

"It is clearly desirable that the ombudsman be established as soon as is practicable."

The formal recommendation was welcomed by the Association of Convenience Stores, which has long urged the Government to move on the issue.

"Introducing an ombudsman is a proportionate, affordable and necessary response to the consumer harm identified by the two-year grocery investigation," said chief executive James Lowman.

"Government must act swiftly on this recommendation."