The idea of an ombudsman to protect suppliers is not really viable unless the issues of anonymity and fear of retribution can be resolved
Do suppliers need an ombudsman to protect their interests? It's hard to see why multinational companies with a portfolio of power brands and healthy operating margins need help from any third party. Smaller suppliers, however, are generally in a weaker position vis-à-vis the big retailers. And it's from this quarter that most complaints about supermarket "bullying" emerge.
But what, exactly, is an ombudsman supposed to do? In its evidence to the Competition Commission, the Country Land and Business Association argued for "some kind of regulator or ombudsman to more pro-actively police a strengthened Code of Practice". Hardly a model of clarity. Advocates of third- party intervention usually focus on prices and margins - assuming this will deliver higher ("fairer") returns for suppliers.
This outcome, however, is by no means certain. The role of an ombudsman in the context of the grocery market would be to influence the way the game is played by ensuring compliance with the Code of Practice. That in itself would not necessarily produce the "right" result from a supplier's viewpoint. In any case, successive audits of the code by the OFT have concluded that the big four supermarkets have, by and large, been observing its provisions. The problem is that suppliers have refused to complain of any breaches, so it's difficult to come to a firm conclusion on compliance.
Does anonymity for complainants offer an antidote to the "fear factor"? The OFT, for one, thinks not: "Natural justice does not allow findings to be made without both sides being able to put their case... It is normal for an ombudsman to require the individual to take their complaint to the company in the first instance and exhaust its own complaints procedure before he will consider the case" (August 2005).
Another point is that in most product categories the big retailers deal with a limited number of suppliers, all of whom are well known to them. A simple recital of the facts and circumstances of a complaint would quickly reveal the supplier's identity.
The challenge is to find a means of overcoming this fear and building a climate of trust so that a small supplier can articulate a complaint without any danger of retaliation. An ombudsman could play a useful role as long as all parties understand its limitations. But unless the Commission can come up with a workable idea to reduce the fear factor, he may be waiting a long time for his first customer.n
Kevin Hawkins, director general,
British Retail Consortium