The ombudsman is coming. As well as strengthening the Supermarkets Code of Practice, outlawing retailers from making retrospective changes to agreed terms,the Competition Commission has proposed introducing a third party to adjudicate in disputes between retailers and suppliers - a headteacher, if you will. So hands up please - is it going to make any difference?

The proposal is the Commission's latest attempt to ensure fair dealing between retailers and suppliers following years of mumblings by suppliers about retailer bullying. Appointed by the OFT, it would act as an independent arbitrator in any disputes and enforce the new code.

And while its exact powers are still subject to discussion, it would, we are told, have the power to receive and investigate complaints and publish the nature of them on the web as well as identify new aspects that should be included in the code. "There will always be tension between retailers and suppliers and that can be a good thing, but if people have a problem they need to complain to someone they can trust who has a good knowledge of the industry," says a commission spokesman.

Retailers are unimpressed, with Tesco describing the proposal as an "unnecessary cog" in the supply chain. says a spokeswoman.

Asda, meanwhile, stresses the need for it to act in favour of consumers and not suppliers. Sainsbury's argues the current complaint process provides for arbitration.

On the supply side the biggest issue for sceptics is that an ombudsman would not solve the problem of supplier anonymity. Duncan Swift, joint head of the food and agribusiness recovery unit at Grant Thornton, conducted a survey of food and drink manufacturers in 2007, and the response rate, at 3%, was the lowest he has ever seen. The average is 15%-20%. "We encourage suppliers in a number of industries to tell us their experiences, good and bad. The fact the response rate is so low in this industry is revealing."

An ombudsman might make it easier to complain, but it won't reduce this fear. "We fight our own corner and feel if we have the right products and are innovative, we can support our relationship with the retailers without the need for help," says a spokesman for a leading supplier. "It is yet another quango and we have far too many already. The idea a third party can come in and police the industry just won't work."

"There have not been a lot of complaints from suppliers and I don't expect this to change," adds Nick Gladding retail analyst at Verdict. "Suppliers are concerned about contracts and don't want to risk criticising the retailers. The ombudsman may encourage retailers to improve their internal processes but its role is not to encourage complaints."

Yet some suppliers believe an ombudsman could help. "We welcome the move," says another big supplier. "It may not make a huge difference but having someone to make formal complaints to is a good thing. We have contemplated recording our phone conversations with retailers because things have been so bad at times. Anything that may make them think twice about how they deal with us is welcome."

The key, the Commission argues, is in the detail. Its proposals are essentially threefold: that it displays "independence, robustness, proactivity, reliability, and the respect of the supply chain".

It also argues it would need to have sufficient financial resources to fully discharge its responsibilities. The OFT currently devotes one or two staff members to deal with complaints at present, but they perform other roles, which may help to explain the slow speed at which its investigations have been conducted.

The Commission proposes an annual budget to be set by the OFT and recommends, as a good model, the Ofcom CRR adjudicator office, which employs three dedicated people: an adjudicator, deputy and a full-time administrator. And the final key to its success is that the ombudsman publish, early on, guidance on reasonable interpretations of the GSCOP.

" The current code is open to interpretation," says Aidan Bocci, chief executive of Commercial Advantage Consulting. "Having an ombudsman to make concrete rulings on what is fair, and what isn't, would be positive . It will be positive in particular for small suppliers and give them a stronger route to complain."

It is not inconceivable that such a fudge is effected. The alternative proposal outlined by the Competition Commission is for the OFT to continue to resolve disputes with the help of an independent arbitrator. This would be quicker and cheaper to establish, but Swift warns it would be the wrong route to take.

"We are facing a Soc Gen moment," he told delegates at The Grocer's Annual Lunch for independents and wholesalers this week. "The commission has already received the warning signs of the rogue traders who operate in grocery retail and on two occasions it ignored it. If the commission wants an effective remedy it must appoint an ombudsman who can proactively and effectively enforce the code, an aim the OFT has singularly failed to do throughout the life of the existing code."Tesco

The 'competition test' means Tesco has the most to lose and it argues it's a 'cap on successful retailers' that will cost the industry £150m a year. It is also unhappy about the prospect of an ombudsman. But setting the limit for a so-called 'Tesco Town' at 60% and not requiring the supermarket to sell off its existing landbank is a real let-off while the prospect of edge-of-town centres appears to open the door for growth.

Sainsbury's Asda Morrisons



Andy Bond & Co have welcomed the competition test, and with Asda set to benefit more than most, he was crowing about his expansion plans this week, while Sainsbury's welcomed the level playing field provided by the new Code of Practice applying to all retailers with sales of £1bn+. An effective ombudsman may be more of an issue, however.

M&S Waitrose Somerfield



M&S in particular has reason to cheer now that it qualifies as a one-stop shop supermarket. And all these second-tier multiple retailers can benefit from the 'competition test'. But like Waitrose and Somerfield, M&S will be subject to the new Code of Practice, which will prevent future changes in supplier terms.

Discounters



The Commission did Aldi, Lidl and Netto no favours when it failed to recognise the status of the so-called LADS, the limited assortment discounters, concluding that their narrow ranges meant they could not provide consumers with proper choice, thus limiting their ability to compete for new sites. They will also be subject to the new Code of Practice.

Independents wholesalers



Neither the teacher's pet nor the troublemaker, independents and wholesalers have seen their claims consistently ignored. Even an ombudsman appears to offer little solace to the independents: the Association of Convenience Stores argues smaller retailers will have no rejoinder if suppliers try to balance price squeezes from multiples with price hikes on them.