Voluntary Code of Practice

Suppliers have always been in a difficult position when It came to dealing with the ‘big four’ supermarkets. (Tesco, Sainsbury’s, Morrison’s and Asda) this was due to large buying power of each supermarket. However in 2002 a voluntary code of practice was brought into force to readdress the balance of power between large supermarkets and there suppliers, after the competition commission had conducted an inquiry into complaints that supermarkets were abusing their market position in their dealings with suppliers. This year long investigation was concluded with the findings that supermarkets were acting against the public interest and that a Supermarket Code of Practice should be introduced. This essay will look at the regulations that were but in place in 2002, the criticisms of the code of practice, what the oft and the competition commissions roles were in the development and the research of the code and finally how it has been updated over the years to become more effective in correcting the balance of power which the supermarkets held over the suppliers.

In 2002 the code of practice came into force to stop the supermarkets from acting against the consumer interest. This was due to the fact the office of fair trading had received many complaints against the big four. Suppliers were not getting a fair deal as the big four supermarkets had over 70% of the UK retail food sales between them, and they realised they could dramatically reduce costs of supplies if they only dealt with fewer but larger suppliers. (Duffy and Fearne, 2004)This was why the enquiry was announced to ensure the big four supermarkets did not take advantage of the smaller suppliers in order to create a larger profit margin for themselves.

Without the code of ...

... middle of paper ...

...s mind at ease as they know they supermarket staff will be trained according to the code of practice which means the dealings should also be as specified in the code of practice.

In conclusion it has been shown that although the code of practice has had its criticism from suppliers it has gone far enough to ensure the fair practicing between the supermarkets and its suppliers. It has done this by listening to the issues that arose between the two sides and made effective compromises to ensure both companies could continue to trade effectively. Each point in the code of practice has been designed to stop the problems that were continually coming up between the two sides and have effectively stopped the buying power of the supermarkets from damaging the way suppliers work and they can now trade without fear of losing the business of the supermarket unfairly.