Under the controversial system, suppliers are required to submit their lowest price via a website for products they either already supply or want to start supplying. Asda uses the lowest price to negotiate with the existing supplier, or switch suppliers.
"They are using auctions to get lower prices from suppliers, something they haven't done for many years," complained one supplier, who said he had retained his business with Asda at a price. " They are shouting so much about lowering prices and it has to come from somewhere. You can't keep lowering prices and increasing profits without it coming from somewhere."
Asda category director for produce Alex Brown insisted the tool would be used with discretion, however. "Each commercial director or category manager can make the choice as to whether to use them. Some have and some haven't," he said. "I was involved with auctions when I was at Tesco, and they were a very blunt instrument. They're a more complex tool now."
On simple, commoditised lines, like bulk Cheddar, they were a good choice, he said. "But where we have a long-term supplier relationship - say on beef, where we've been with ABP for 30 years - we'd never use auctions."
There was another advantage, he said. "We've just done an auction for our own-label water business, after agreeing not to continue with our current supplier. All trading terms are pre-set on auction, the only variable is price. It saves time."
The auctions became popular after the internet revolution in the 1990s, but were later abandoned. "For any retailer to be good at this, they have to be very clear about the product specification," said Aiden Bocci, chief executive of Commercial Advantage. "The lowest cost is typically from people who reduce the product specification."