As the former head of food and agribusiness recovery at Grant Thornton soon to take up a similar position with another firm, I would like to comment on the contributions in recent editions against the appointment of an ombudsman.
The comments of Dr Clive Black and Stephen Robertson of the BRC show little consideration of the facts. Both infer a lack of supplier evidence to support the Competition Commission's recommendation.
Dr Black writes: "there is no meaningful or usable evidence to show suppliers have been [....]abused by supermarkets".
How, then, is it that the Commission made this recommendation? The academic evidence from Tim Lloyd at the Nottingham School of Economics (Saturday Essay, 6 March, p22) is supported by independent agents such as myself giving examples to the Commission of the regular instances of supplier financial distress we have seen caused by abusive supermarket buyers.
This distress was not a consequence of the original supply price agreed between supplier and buyer; it was the uncertainty of that price actually being paid once supply has been made; subsequent price erosion typically being seen through retrospective demands for "contributions" and increased credit costs from grossly extended payment terms.
Dr Black and the BRC also lament the cost to the taxpayer and to consumers. Both ignore the costs of lost jobs, redundancy payments and the failures of businesses caused by abusive buyer behaviour. They similarly ignore the Commission's published estimate of the costs of running an ombudsman, which Grant Thornton calculates at 1.25p per week on an average family's shopping bill considerably less than the "2% or 3% more for their food shopping" the BRC say consumers may pay.
The BRC wants to maintain the status quo, even though "reasonable" buyer behaviour is not defined in the code and the OFT has failed to act in the past eight years.
As in football, a proactive referee is needed to inject certainty where unreasonable behaviour is found and to discourage such behaviour in the first place.
Duncan Swift, former head of food and agribusiness recovery, Grant Thornton
The comments of Dr Clive Black and Stephen Robertson of the BRC show little consideration of the facts. Both infer a lack of supplier evidence to support the Competition Commission's recommendation.
Dr Black writes: "there is no meaningful or usable evidence to show suppliers have been [....]abused by supermarkets".
How, then, is it that the Commission made this recommendation? The academic evidence from Tim Lloyd at the Nottingham School of Economics (Saturday Essay, 6 March, p22) is supported by independent agents such as myself giving examples to the Commission of the regular instances of supplier financial distress we have seen caused by abusive supermarket buyers.
This distress was not a consequence of the original supply price agreed between supplier and buyer; it was the uncertainty of that price actually being paid once supply has been made; subsequent price erosion typically being seen through retrospective demands for "contributions" and increased credit costs from grossly extended payment terms.
Dr Black and the BRC also lament the cost to the taxpayer and to consumers. Both ignore the costs of lost jobs, redundancy payments and the failures of businesses caused by abusive buyer behaviour. They similarly ignore the Commission's published estimate of the costs of running an ombudsman, which Grant Thornton calculates at 1.25p per week on an average family's shopping bill considerably less than the "2% or 3% more for their food shopping" the BRC say consumers may pay.
The BRC wants to maintain the status quo, even though "reasonable" buyer behaviour is not defined in the code and the OFT has failed to act in the past eight years.
As in football, a proactive referee is needed to inject certainty where unreasonable behaviour is found and to discourage such behaviour in the first place.
Duncan Swift, former head of food and agribusiness recovery, Grant Thornton
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