Supermarket battle as Sainsbury's pulls out of trade body

Britain's biggest supermarkets are at loggerheads just as the Competition Commission launches its latest inquiry into the sector. J Sainsbury has suspended its membership of the British Retail Consortium, the retail industry's trade body, until the end of April, after a row over food labelling.

Sainsbury's suspended its membership on Friday, blaming a television interview given by Kevin Hawkins, the trade body's director general. The company is furious that Mr Hawkins appeared to back Tesco's opposition to the Food Standards Agency's plans to introduce red, amber and green warning signs on processed foods to indicate high, medium or low levels of fat, salt and sugar, even though Sainsbury's supports the proposal.

"This follows concern about how the BRC is able to represent members effectively on issues where they hold significantly differing views," a spokesman for Sainsbury's said. "We have had concerns for a while, but this issue was highlighted most recently following the FSA's announcement on sign-posting."

Sainsbury's said the latest row was not an isolated incident and that it had found it increasingly difficult to belong to an organisation whose members had such obviously different opinions.

The spat is the latest in a series of disagreements that have dogged the BRC as it prepares to defend the supermarkets to the Competition Commission inquiry.

A spokesman for Asda said that while it remained a member of the BRC, it has been concerned about the group's response to the announcement of the Competition Commission's inquiry. The supermarket was "not 100 per cent in agreement" with Mr Hawkins' public comments about the investigation, Asda said.

In addition, earlier this month, Archie Norman, the former chairman of Asda, accused both his former employer and Sainsbury's of "briefing against" Tesco, in an attempt to persuade regulators to investigate it as the UK's leading supermarket group, rather than the sector as a whole.

With the BRC losing the support of Sainsbury's, one its most important sources of funding, and facing criticism from Asda, there is increasing concern that the organisation could be damaged irreparably.

Attempts by the BRC to present a united front to the Competition Commission will be further hampered by the fact that Wm Morrison, the UK's fourth-largest supermarkets chain, is not even a member of the group.

A spokesman for the BRC said: "We represent a broad range of retailers. This is a private matter between Sainsbury and ourselves - we are in discussions with them and are confident that the issue will shortly be resolved."