The coalition government is to press ahead with plans for a supermarket ombudsman under the banner of the Office of Fair Trading.

Consumer minister Edward Davey announced today that a “code adjudicator” would be introduced to resolve disputes between supermarkets and suppliers, following a consultation over the new supply code of practice, which took effect in February.

“We want to make sure large retailers can't abuse their power by transferring excessive risks or unexpected costs onto their suppliers,” Davey said.

“These sorts of pressures are bad for producers and bad for consumers. Ultimately they can lead to lower quality goods, less choice and less innovation.

"The adjudicator will be able to step in to prevent unfair practices continuing, ensuring a fair deal for producers and safeguarding the consumer interest."

A draft Bill will be published later this year with a view to establishing the office through primary legislation.

Retailers greeted the news with dismay.

“An ‘adjudicator’ will just add unnecessary costs,” said Stephen Robertson of the British Retail Consortium. “We fail to see why principles of better regulation don’t apply to grocery retailing, particularly when the additional costs will ultimately affect the prices customers pay.

“The existing code of practice was strengthened and extended as recently as February. Its effectiveness over several years should be assessed before any decision to introduce further regulation.”

He added: “The key concern for the Competition Commission was consumers not suppliers. I don’t see anything in this proposal that will help them.” 

The Food & Drink Federation welcomed the move, with chief executive Melanie Leech urging the government “to make it a reality as quickly as possible”.

“The pragmatic proposals outlined today will ensure that there is an effective, low-cost monitoring and enforcement body in place,” she said.

“We believe the adjudicator will be of particular help for smaller businesses, ensuring that the food chain operates fairly and in the best interests of consumers.”

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