Business World

Friday 13 December 2019

Emails from UK supermarkets 'bullied' farmers


Thomas Molloy

THE problems faced by Irish suppliers are not unique. Three years ago, British investigators unearthed threatening emails from that country's biggest supermarkets to bully farmers and food suppliers into cutting prices.

Still, a two-year probe into the problem by the Competition Commission ended up giving the sector a clean bill of health.

The 2008 investigation, the third in eight years, listened to 700 submissions and 81 hearings but found that "in many important respects, consumers are receiving the benefits of competition, such as value, choice, innovation and convenience".

However, the watchdog also proposed a shake-up of the planning laws and demanded the imposition of a supermarket regulator to address its areas of concern.

"In many important respects, competition in the UK groceries industry is effective and delivers good outcomes for consumers, but not all is well," it said.


Peter Freeman, the commission's chairman, also passed on information to the UK authorities as part of a separate investigation into alleged price fixing between supermarkets and food manufacturers.

The commission's proposals included:

• The strengthening of the supplier code of conduct, which will be overseen by a new ombudsman.

• The introduction of a "competition test" to the planning process, overseen by the Office of Fair Trading.

• A crackdown on covenants that blocks rivals from opening stores.

A year earlier, it emerged some supermarkets had warned suppliers to reduce the price at which they sold their food to the retailers or faced being axed.

The commission ordered Tesco and Asda to submit all emails, letters and taped phone calls between them and their suppliers from a five-week period when they initiated a £520m (€592m) round of price cuts.

Messages from supermarket staff allegedly told suppliers to pay so-called retrospective payments -- a system by which the latter end up giving the retailers discounts for selling their items -- or face the axe.

The nature of such communications, effectively putting the suppliers "over a barrel", contravenes a code of conduct the retailers have signed.

"The emails were asking for things in a fashion that they shouldn't. They were basically demanding retrospective payments, or else," said a source.

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