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OFT report says suppliers are getting a fair deal

An independent audit by PKF of the OFT’s Code of Practice governing UK supermarket/supplier relationships has concluded that, “by and large”, supermarkets are complying with the Code.

However Packaging Federation ceo Ian Dent has dubbed the audit “yet another whitewash” and the OFT admits it is concerned the Code is not being used, as it had hoped, to resolve disputes, due to suppliers’ reluctance to come forward.

Packaging suppliers have long complained the Code is toothless and has done little to stamp out unfair practices. Dent says the latest audit has “demonstrated just how ineffective it is amidst a climate of fear about complaining”. He believes the 90-day exchange of views period, which suppliers must currently use to try to resolve disputes before requesting independent arbitration, should be cut to 30 days or scrapped, since during such a lengthy period many packaging businesses may have been “irreversibly damaged”.

Converters complain some supermarkets still use third party rebates (requiring suppliers to pay over to the retailer part of their fee from brand owner customers), change business terms and prices retrospectively, and excessively delay payments. Some also reportedly still insist suppliers pay lump sums to remain on their approved supplier list.

The OFT’s latest audit found “little evidence” of Code breaches but did uncover instances of requests for “loyalty” lump sum payments. Forty-four of the 46 stocking/listing payments were requested by Safeway, but the OFT says its new owner Morrison’s does not request such payments.

While evidence of breaches may be scarce, the OFT believes too many suppliers remain unwilling to bring complaints forward. It insists they must overcome their fears and use the Code’s dispute resolution procedure to address “concerns” about supermarket dealings.

The OFT has requested further comments by May 31, but Dent says he “cannot see the point in seeking yet more views”. He advocates an independent auditing body within the OFT or government to resolve disputes and “far more opportunity” for suppliers to voice worries anonymously.