Competition watchdog accused of ignoring supermarket breaches over supplier inflation requests

Competition bosses have been slammed for a “wall of silence” over supermarket tactics to try to keep the lid on supplier inflation.

The British Brands Group has written to the government, accusing the Competition & Markets Authority of failing to intervene to enforce competition law.

It said suppliers were encountering repeated calls for detailed breakdowns of costs from supermarkets, to substantiate requests for cost price increases, often including confidential information about their businesses.

Other retailers were accused of refusing to put through inflationary requests unless other retailers did the same, which the group said could amount to price fixing.

The criticism, which comes in the week Kantar figures showed grocery prices soared by a record 13.9% last month, came in a response to the Department for Businesses, Energy, and Industry Strategy’s statutory review over the role of the Groceries Code Adjudicator, which comes to an end this week.

The Grocer revealed in July BEIS was considering plans to scrap the independent Adjudicator and merge its functions with the CMA, in order to find efficiency savings.

However, BBG director John Noble said the lack of intervention and transparency shown by the CMA showed it was not fit to take over the GCA role.

“The CMA has responsibilities for enforcing competition law though it has been silent on [these] two ongoing retailer practices that have competition law implications but fall outside the code.

“In both instances the CMA has been silent, suggesting it might also be silent when code-related issues arise.”

As well as requesting confidential details, Noble said supermarkets were frequently refusing price increases unless they were accepted by rivals.

“Where a retailer states that it will not accept a price increase unless other retailers increase their prices, they are not acting independently but motivating suppliers to influence the consumer prices of other retailers, contrary to competition law,” he said.

The BBG also criticised the CMA for its lack of transparency over its decisions on which retailers were policed by GSCOP. While Amazon was added to the list in March, suppliers have  been calling for others, including Boots and Holland & Barrett, to be policed.

Its consultation response added: “We are not aware of the CMA having such hands-on oversight and practical enforcement day-to-day of any of its other remedies. We also doubt whether the CMA will have the same visibility as the GCA, not having the resources to attend the number of meetings indicated in the GCA’s latest annual report, for example.”

FDF head of international trade Dominic Goudie said the government should be looking to increase the powers of the Adjudicator, rather than weakening them.

“Now is the time to increase the GCA’s resources to ensure it is equipped to tackle the rising challenges facing suppliers and the increased number of retailers in scope of the code, while the CMA should reopen its groceries market investigation to ensure the code remains fit for purpose given the changing landscape of UK retail since 2010,” he said.

Meanwhile, bodies including the Food Ethics Council, the NFU, Sustain and the Fairtrade Foundation have written to every MP in the country urging them against scrapping the GCA, warning it would substantially weaken the protection provided to suppliers.

NFU director general Terry Jones said: “During the period under review, the Groceries Code Adjudicator has been incredibly valuable to the food supply chain in continuing to hold retailers to account and allowing farmers and growers to highlight breaches of the Groceries Supply Code of Practice without fear of repercussion.

“Our response recognises this but also where improvements can be made to improve the effectiveness of the GCA’s role, including better emphasis on ensuring confidentiality throughout the process.”

The CMA said it had been unaware of BBG’s concerns, and had asked it to submit any evidence of suspected breaches of competition law. “The CMA takes reports of suspected breaches of competition law very seriously and urges any person or firm with evidence of potentially anti-competitive practices to contact the CMA,” it added.