Exclusive Clive Beddall
The DTI's legally binding code of trading practice, set to be imposed on the big five multiples soon, will be tougher than the industry's voluntary version facilitated by IGD last year.
The Grocer has seen the confidential 24 point draft code, and while there are obvious similarities with the voluntary version drawn up by major chains last year, the OFT's rules for trading arrangements between retailers and suppliers are far stronger and more specific
In many cases it outlaws practices which have been a bone of contention between medium sized suppliers and big retailers over the years.
A director of one of the five predicted on Wednesday:"The code will change the style of supplier-retailer relationshipsbecause it puts more onus on supermarket buyers. But it's much more workable than the ponderous, unbalanced piece of legalese the OFT presented us with last year."
The third and probably final draft of the code says the chains must not force suppliers to make a lump sum payment in order to secure better positioning for any products unless payment is made in relation to a promotion.
The code also decrees that multiples should not unreasonably force suppliers to pay more than 50% of the costs of a promotion.
In addition, it outlaws retrospective reductions in prices paid to suppliers. It says supermarkets must not force suppliers to reduce the price of, or increase the discount for a product unless reasonable notice has been given.
The OFT says suppliers should have no obligation to contribute to marketing costs. Specifically, the draft says a supermarket should not, directly or indirectly, unreasonably require a supplier to make payments towards the cost of buyer visits, artwork or packaging design, research, the opening or refurbishing of a store, or hospitality for supermarket staff.
Tesco, Sainsbury, Asda, Safeway and Somerfield pass their final comments on the draft to the OFT by this weekend. It will then be circulated to interested parties including the FDF and the NFU.
Last month, NFU president Ben Gill complained angrily that his organisation had not been brought into the consultation process. "I can only deduce that the people drawing up the code do not know how the real world works," he said.
See Opinion, page 16.
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