Saturday 22nd Oct 2016 - Logistics Manager

OFT accused of “ignoring” supplier financial stress

The Office of Fair Trading is ignoring the fact that food suppliers are going bust directly as a result of supermarket behaviour, according to Duncan Swift, head of Grant Thornton’s Food & Agribusiness Recovery group.

Swift made his comments to Logistics Manager following the OFT’s conclusion that the Supermarket Code of Practice “should remain unchanged but be used more effectively”. The OFT maintains that there is no clear evidence to support the view that the competition in the market for the supply of groceries is being restricted.

Swift says it is frustrating that the OFT will not act to help food suppliers who are increasingly finding themselves under major financial distress caused by the market power wielded by the major multiples.

“The OFT conclusion to maintain the status quo is simply a reflection of the lack of political will to address the grocery trade,” adds Swift.

His call for the establishment of a Supermarket Ombudsman – similar to the Banking Ombudsman – has been rejected by the OFT which argues that the Code already contains a dispute resolution process.

Swift says that instead of taking a snap-shot of the situation by looking at current suppliers the OFT should have looked at contract terminations between 2002/2005 and look at the reasons behind them. He believes that the OFT should have also consulted with insolvency firms like Grant Thornton.

“I know of two major food groups where supermarket behaviour was a major cause of their downfall.” says Swift.

Other companies and organisations branded the OFT report a “whitewash”.

A spokeswoman for the OFT says there are no plans to look into the Code again. “Unless there is sound evidence that the code is not working we will not be conducting another review.”