The Office of Fair Trading is expected to decide next week whether to launch its first investigation into an alleged breach of the supermarkets code of conduct.
The Office of Fair Trading has told The Grocer that Asda’s decision to ditch its main own-label ready meals supplier “may be a breach of the code”. Ferndale Foods was contracted to supply almost half of the supermarket’s ready meals, worth some £40m in annual sales, but was ditched by the multiple on June 22 in favour of Northern Foods.
The company claims that Asda gave it only 84 days’ notice, instead of the 90 days it needed to consult over potential redundancies under employment law, and says that the retailer’s decision threatens 600 jobs at its south east London-based Thamesmead plant, which was dedicated to supplying Asda.
Ironically, it was opened by former Asda chief executive Allan Leighton in 1996 after Ferndale Foods won the retailer’s account. The plant is one of three operated by the company.
Asda this week denied any breach of the code, claiming it gave notification that its contract was up for tender 18 months ago.
It has since agreed to phase out the contract over a five-and-a-half-month period.
Under the terms of the code itself, the OFT can direct Asda to go to mediation for the unresolved
dispute after 90 days, a period that expires at the end of next week.
Ferndale Foods said it was dismayed at the OFT’s initial reaction when it lodged its complaint. “It said the code was self-policing, so although it would be interested to see how things turned out, it would not take an active role,” said John Bigwood, owner of Ferndale Foods.
However, after pressing the OFT it agreed to look into the matter. “We believe there may be a breach of the code and we’re in discussion with both parties at the moment,” said an OFT spokeswoman. “Both sides have been co-operating.”
>>p41 Breaking up is hard to do
The Office of Fair Trading has told The Grocer that Asda’s decision to ditch its main own-label ready meals supplier “may be a breach of the code”. Ferndale Foods was contracted to supply almost half of the supermarket’s ready meals, worth some £40m in annual sales, but was ditched by the multiple on June 22 in favour of Northern Foods.
The company claims that Asda gave it only 84 days’ notice, instead of the 90 days it needed to consult over potential redundancies under employment law, and says that the retailer’s decision threatens 600 jobs at its south east London-based Thamesmead plant, which was dedicated to supplying Asda.
Ironically, it was opened by former Asda chief executive Allan Leighton in 1996 after Ferndale Foods won the retailer’s account. The plant is one of three operated by the company.
Asda this week denied any breach of the code, claiming it gave notification that its contract was up for tender 18 months ago.
It has since agreed to phase out the contract over a five-and-a-half-month period.
Under the terms of the code itself, the OFT can direct Asda to go to mediation for the unresolved
dispute after 90 days, a period that expires at the end of next week.
Ferndale Foods said it was dismayed at the OFT’s initial reaction when it lodged its complaint. “It said the code was self-policing, so although it would be interested to see how things turned out, it would not take an active role,” said John Bigwood, owner of Ferndale Foods.
However, after pressing the OFT it agreed to look into the matter. “We believe there may be a breach of the code and we’re in discussion with both parties at the moment,” said an OFT spokeswoman. “Both sides have been co-operating.”
>>p41 Breaking up is hard to do
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