OFT to review supermarket code of practice

The Office of Fair Trading is to review the code of practice put in place a year ago to prevent supermarkets from exploiting their suppliers.

The code was put in place after the Competition Commission's investigation in to supermarket profits in October 2000.

The OFT undertook to look anew at the code every year, though this first review comes at a sensitive time as the industry is gripped by the six-way bid battle for Safeway. The OFT is already examining five of the Safeway bids and is seeking comment from suppliers as part of the process.

The review also follows reports of fresh pressure being applied to suppliers by Safeway. Britain's fourth-largest supermarket group has been accused by some suppliers of seeking up-front payments running into six figures in return for a continuing relationship.

However, the OFT said its review of the code was unlikely to be published until late spring, or early summer. This will be too late for its decision on the Safeway bids on which it is due to rule by 18 March.

Only supermarkets with a UK market share of 8 per cent or more are covered by the code. In effect this means it only includes Tesco, J Sainsbury, Asda and Safeway. If any breaches are discovered and the supermarkets do not offer to address the situation, they can be referred to the Department of Trade and Industry.

Separately yesterday it emerged that Asda is considering building mezzanine floors in up to 40 of its stores as a means of boosting selling space and getting around restrictive planning regulations.

The Wal-Mart owned group has been testing a mezzanine level in its store in York and has initial plans to open two more in Scotland and one in Sheffield with a total of 63,000 square feet between them. Asda says the extra space will enable it to offer a wider range of non-food goods such as its George clothing range.

Wal-Mart is due to report its fourth-quarter results today in which it will update the markets on the performance of Asda. The figures will be scrutinised by City analysts to see if there has been any slowdown in Asda's like-for-like sales growth which has been running at 5 to 10 per cent.