“For example, FWD welcomes the prospect of an effective Supermarket Code of Practice that might, at last, bear down on the abuses of retailer buyer power that have been identified,” he said.
FWD’s main concern has always focused on the higher buying prices wholesalers have to pay to manufacturers for goods in comparison with the prices that the major supermarkets can extract.
Although the CC has identified that this differential can be around 13% currently, the Federation is worried that this aspect of the investigation has not been given sufficient emphasis.
Despite the insistence by FWD that it should compare wholesalers’ buying prices for large volumes across a wide spectrum of categories, the CC has used a significantly smaller sample of suppliers and products than it did in its inquiry in 2000.
Murphy added, “We do not understand this failure, as this information is critical to ensuring that the wholesale/independent channel can compete effectively in a fair marketplace.”
The Competition Commission has identified a significant number of local markets where consumers suffer from weak competition and it is likely to intervene to redress the situation.
“However, easing the introduction of even more supermarkets into the UK grocery market would work totally against wholesalers’ interests, and those of the independent convenience retailers they serve, by sucking ever more consumer spending away from the wholesale/independent channel,” said Murphy.
The FWD and its members will study the detail of the report and respond to the CC in due course.