The Competition Commission (CC) has called upon government to establish a grocery ombudsman.
The recommendation comes after the Commission admitted defeat in its 14-month attempt to persuade supermarkets to back a voluntary ombudsman scheme to arbitrate on disputes between retailers and suppliers.
The ombudsman would operate under the Commission's new Groceries Supply Code of Practice (GSCOP), created on the recommendations of its inquiry into the grocery market last year. However, while the CC has the legal power to impose the GSCOP, it does not have the power to impose the Ombudsman.
In the absence of an Ombudsman, should a large retail group fail to comply with the GSCOP in its dealings with a supplier, the supplier would have not recourse but to take the matter to court.
Retailers with groceries turnover in excess of £1 billion per year have six months to comply with the new regulations, which prohibit the making of retrospective adjustments to terms and conditions of supply and require retailers to resolve disputes with suppliers. It will also be made compulsory to keep written records of agreements with suppliers.
Peter Freeman, CC chairman said: "Our inquiry clearly revealed problems that require action and which, if left unchecked, would damage the consumer. The current economic difficulties if anything reinforce rather than reduce the need for action.
"It is clearly desirable that the Ombudsman be established as soon as is practicable. The new Code of Practice will work much better as a result and suppliers and retailers will have greater confidence that its terms will be observed."
Association of Convenience Stores chief executive James Lowman also urged the government to introduce an ombudsman. “Introducing an ombudsman is a proportionate, affordable and necessary response to the consumer harm identified by the two year grocery investigation,” he said. “Government must act swiftly on this recommendation.”