The Competition Commission has begun a public consultation over proposals to create a grocery ombudsman, but why would one be necessary and who would benefit?
Why is an ombudsman thought to be necessary?
The Competition Commission investigated the grocery market last year. Commission chairman Peter Freeman, who also chaired the investigation, said it “uncovered significant evidence of problems in the way retailers deal with their suppliers which, if left unchecked, will harm consumers’ interests”.
How would it work?
The ombudsman would be appointed by the Office of Fair Trading (OFT). As well as arbitrating in retailer-supplier disputes, the ombudsman would hear complaints about alleged breaches of the grocery code, provide guidance on the code’s provisions, make recommendations on improved compliance and report to the OFT.
What if retailers do not support the proposal?
If retailers fail to back the plans, the Competition Commission will recommend to the Department for Business Enterprise and Regulatory Reform (BERR) that it establish the ombudsman without support.
Who would pay for it?
Retailers. Although the OFT would set the ombudsman’s annual costs and expenses budget, the Competition Commission said: “These costs will be reimbursed from retailers using a formula that will take into account the size of retailers as well as the number of complaints involving them and requiring resolution.”
What do retailers think?
Opinion is diverse. A Tesco spokeswoman said: “We remain concerned. Ombudsmen are supposed to look after the consumer, but this one is concerned with the interests of suppliers. This couldn’t be a more difficult time for our customers and we hope the Commission will reflect further on the wisdom of the proposal.”
A Waitrose spokeswoman said: “We believe regulation will be most effectively managed by the OFT as opposed to the establishment of an independent ombudsman.”
Retail trade bodies have also taken opposing views. The BRC lambasted the plan, but the Association of Convenience Stores maintained it was time for action, not words. “We are calling on the Commission to act now to end
the pointless negotiations over a voluntary agreement,” it said.
What happens next?
The consultation ends on May 28. By then retailers must agree the ombudsman scheme or the Commission will recommend that the BERR establish the ombudsman regardless of retailers’ approval.
1 Reader's comment