A senior minister has indicated the government will not act against supermarket power unless the Office of Fair Trading (OFT) receives “firm evidence” of problems with the market. During Department of Trade and Industry (DTI) questions in Parliament last week, Industry Minister Alun Michael was quizzed by MPs about the perceived ineffectiveness of the supermarket code of practice, and the growing power of the multiples.

Orkney and Shetland MP Alistair Carmichael asked Michael whether he would set up an independent regulator to investigate complaints against supermarkets as an alternative to the current supermarket code of practice.

Michael called this “a bureaucratic response”, saying: “The audit of competition issues undertaken for the OFT does not show evidence of failure that would require intervention, but the period in which people commented on the report was extended to the end of May to allow suppliers to comment.

“Frankly, the supermarket code is effective only if suppliers use it, and the OFT can take action under the code only if there is firm evidence of problems. It would be wrong to over-regulate without evidence of the need to do so.”

The OFT is considering evidence from a number of sources about the supermarket code of practice. Trade associations including the ACS have called for a full market review of the grocery sector, and independent retailers have supplied evidence of market distortions due to the growth of multiple supermarkets.

Michael said the government will wait for the OFT’s findings before taking any action, adding: “It would be wrong for us to have a dog and bark ourselves. I invite all honourable members to read the report, look at the evidence and be prepared to take part in a good discussion about this.”

MPs’ comments

David Drew (Stroud, Lab/Co-op): “The supermarkets see the code of practice as a bit of a joke, which is why they are happy to sign up to it. Is it not about time that we examined the true criterion, which is how many shops are being lost on the high street and the degree to which the supermarkets are swallowing them up?”

Peter Robinson (Belfast East, DUP): “Given the massive buying power of the supermarkets and the recognition that the code of practice is ineffective and meaningless, does the Minister accept that there is a need to have real teeth in regulatory methods?”

Keith Vaz (Leicester East, Lab): “Companies such as Tesco are behaving like pit bull terriers. Tesco controls the market, has done huge damage to our high streets and is forcing suppliers to reduce their margins. That costs jobs.”

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