David Prosser: A poor deal for grocers and their suppliers

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The Independent Online

Outlook It's not a bad rule of thumb that when both sides complain about a watchdog's activities, the balance of regulation is being struck about right. All rules have exceptions, however, and the new supermarket adjudicator proves the point.

The announcement by the Government yesterday that it is to accept long-standing calls for some sort of ombudsman to police the relationship between the supermarkets and their suppliers does at least bring an epic saga closer to its finale (though we won't actually see anything happen before 2012). This is a process that has seen three separate Competition Commission inquiries since 2000 and it is two years since that authority recommended the introduction of a watchdog in the groceries sector.

Still, this is a watchdog that appears to have a pretty quiet bark and no bite at all. It is not even a fully fledged ombudsman but an adjudicator, who will mediate between some of the most powerful companies in the land and their often vulnerable suppliers. What powers will it have to bring the groceries to heel, should it prove necessary to do so? None that we know about as yet.

The Government appears to believe that a spot of naming and shaming will bring the grocers to their senses. Well, bad publicity does not seem to have had much impact on Tesco, for example, which – fairly or unfairly – has come in for plenty of stick over the years, but carried on regardless. This is not to say, by the way, that the supermarkets necessarily need curbing – just that if you believe there is a case for an ombudsman, you might as well do a proper job of introducing one.

Nor is this a satisfactory outcome from the supermarkets' perspective. They have already agreed to abide by a code of practice when dealing with suppliers; now they face extra compliance costs as they work with the new authority.

As for the Government, isn't it currently in the midst of hurling as many quangos as possible on to the bonfire of public spending cuts? Introducing another one rather undermines that process. Taxpayers will bear the costs of funding the new adjudicator's office – and consumers will doubtless pick up the tab for the supermarkets' additional costs.