Supplier complaints lack evidence, says UK grocery probe

By Chris Mercer

- Last updated on GMT

Related tags Supermarket

Complaints by food suppliers and producers about mistreatment at
the hands of large retailers have still not been backed up, says a
report on the UK grocery chain probe.

The report reviews evidence gathered by a UK Competition Commission panel since the watchdog agreed last year to re-open an investigation into grocery chain trade practices.

Fears that large supermarkets were abusing their market position with suppliers has formed a big part of the inquiry. The top four supermarkets control roughly three quarters of the supply chain.

The Commission said evidence so far "hasn't indicated widespread problems in the supply chain, [but] there are still concerns"​.

It said food and drink manufacturers, processors and wholesalers appeared to be "in reasonable shape"​, and it had received less examples of unfair treatment than expected.

Fear of losing contracts could be a factor, it added, although it was unsure how big.

"Many suppliers have been reluctant to provide us with details of specific instances to illustrate the general concerns that have been raised due to concerns of possible retaliation by grocery retailers."

"In the absence of more specific examples, we may find it difficult to come to any conclusion."

Investigators said they had more serious concerns about farmers, particularly in dairy where farmgate milk prices remain low, but again appealed for more information.

Almost 1,000 dairy producers have quit the sector over the last year, according to recent industry figures.

Dairy and farming groups were still considering their positions to the progress report Tuesday morning.

Privately, one senior dairy industry official told​ the sector should not rely on the Competition Commission to sort out its problems. The industry's future was "in its own hands"​, the source said.

The Commission report said it would continue to examine supply chain earnings as it moved into the next stage of the inquiry, which is set to focus on competition between retailers at a local level.

The update singled out Tesco, the UK's largest supermarket, in its concern that one supermarket may come to dominate the market with no effective competition.

Suppliers also face some tough questioning amid evidence that they charge higher prices to smaller retailers to compensate for lower prices when dealing with supermarkets - known as 'the waterbed' effect.

Other lines of inquiry still being pursued include below-cost selling, recently criticised by the brewer Scottish & Newcastle, and supermarket land ownership.

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