06 April 2006

Anti-poverty agencies today made a last-ditch plea for the proposed Competition Commission investigation into Britain's supermarket giants to probe claims that they abuse their market power against suppliers in poor countries.

The appeal comes on the day the Office of Fair Trading ends public consultation on its proposal for an inquiry into the big four chains' dominance of the grocery sector.

In a letter to OFT chief executive John Fingleton, the agencies highlighted their response to the consultation with evidence that British supermarkets have violated a voluntary code of conduct introduced to protect suppliers four years ago.

They say supermarkets' dominance of an ever wider part of the retail sector is giving them too much control over consumers and suppliers, and that buying practices such as instant price cuts, late order changes and refusing to sign contracts with producers are undermining the fight against poverty.

These practices result in low wages, longer hours and poor health and safety conditions for workers in developing countries, and increased risk of falling into poverty for small-scale producers.

The group cites five earlier reports – three from the OFT and two by the Competition Commission – which also found the supermarkets' overwhelming buying power causes harm to suppliers, and that the supermarket code is not working effectively.

But, despite this evidence, the OFT has failed to recommend the proposed inquiry examines the chains' relationship with suppliers in the UK and abroad, or examines non-food sectors like clothing where supermarkets play an increasingly dominant role.

ActionAid policy officer Dominic Eagleton said: "The OFT has more than enough evidence to warrant an investigation into supermarket bullying against suppliers, including producers in developing countries. Instead of continually skirting the problem, the OFT must use this opportunity to tackle it head on."