Do we really need more regulation?

Thursday this week passed quite uneventfully in the grocery world. Yet for the Competition Commission, yesterday marked the deadline for responses on the proposed grocery ombudsman.

The Competition Commission will update on the conclusion of its consultation at the end of June but the feeling among the industry is that there won’t be any voluntary agreement.

Grocers have long held the belief that an ombudsman is not needed. They all maintain they have established relationships with their suppliers and internally have their own code of conduct rules which need to be adhered to.

The recession has heightened the tension between grocers and suppliers, as it has in every other sector of retail. As grocers seek to take costs out of the business there are inevitably conversations that need to happen with suppliers.

But as many grocers have pointed out, some suppliers themselves are big businesses in the shape of Procter & Gamble and Unilever and they too need to make sure their own businesses are as efficient as possible.

Asda boss Andy Bond said earlier in the month that retailers’ and suppliers’ primary focus must be to look at their own cost bases before deciding to pass on inflationary prices. And as the recession continues to bite, any efficiencies implemented now will stand any company in good stead. And those efficiences mean they are able to help customers through these difficult times.

We shouldn’t forget the smaller suppliers who are struggling just as much as some retailers. But as many grocers including Waitrose, Tesco and Asda have witnessed over the past couple of months, sales of local produce has rocketed as shoppers want to know where their food comes from and want to support local businesses. Grocers would therefore be foolish to lose these relationships, and there is no sign that this is happening.

In the current climate therefore, the implementation of a grocery ombudsman – which would be paid for by retailers – is just another unwanted cost. Grocers just don’t have the time and money to invest in its establishment and its benefits to the consumer are not clear either.

If a voluntary agreement does not happen, the Competition Commission will refer the matter to the Government’s Department for Business Enterprise and Regulatory Reform. The Government is not honour bound to act on any recommendation from the Competition Commission could actually can the whole idea. You have to wonder too – has the Government not got its hands full at the moment?

A two-year investigation into the grocery sector found that the major players are all acting responsibly on the whole. Do we really need more regulation?