New rules protect supermarket suppliers

A new, tougher code of practice governing how the big supermarket chains deal with suppliers came into force today.

Among the tactics outlawed are supermarkets changing supply terms retrospectively and demands that suppliers fund promotions such as two-for-one deals.

Big retailers will also have to keep written records of their negotiations with suppliers.

The new Grocery Suppliers Code of Practice (GSCOP) - which replaces the Supermarket Code of Practice - follows long-running complaints from suppliers and farmers of unfair dealings and unreasonable demands from the big supermarket chains.

Officials at the Competition Commission (CC) outlined the new terms in August last year, saying they were needed "to ensure that suppliers do not have costs imposed on them unexpectedly or unfairly by retailers".

The code covers firms with a grocery turnover of more than £1 billion per year.

That includes the big four supermarket groups - Tesco, Asda, Sainsbury's and Morrisons - as well as smaller rivals like Marks & Spencer, Waitrose, Lidl, Iceland and the Co-operative Group.

The previous regulations applied only to the four largest chains.

The CC also recommended that the Government set up an ombudsman to monitor the code's compliance, with the power to levy penalties on retailers breaking the rules.

Last month the Government said it accepted in principle the need for such a body, and would start consulting this month what form it would take.