As my hon. Friend knows, that is a matter primarily for the Department for Business, Innovation and Skills, and my noble Friend Lord Mandelson and his ministerial colleagues are examining it closely. We want to ensure that the best interests of the UK economy, UK production and UK workers are to the fore in the consideration of the takeover. I am a West Ham United supporter and, having followed the football club's recent takeover, I know that anybody who is interested in any takeover of a commercial operation wants to ensure that it is as successful as possible. I know that the Cadbury-Kraft issue will evolve in the weeks and months ahead, and my hon. Friend and many other Members will take a keen interest and wish everybody success.
As I said, there has been mounting concern over recent years among various industry and lobbying groups about the power of the major supermarkets and the impact that that has on the supply of groceries, including the ability of local producers to access markets. The Government and the Office of Fair Trading shared those concerns and asked the Competition Commission to investigate the groceries market and see whether supermarket power was detrimental to consumer interests. We welcomed the commission's final report, published last year, and thanked it for its work.
The commission found that in many respects, competition between supermarkets was strong and working effectively. Competition in the groceries market provides consumers with diverse choice, good value and low prices, and that is reflected in the numbers of shoppers who choose to buy their groceries in supermarkets. However, the commission identified two adverse effects on competition—areas in which the market structure does not work in the best interests of consumers.
The first finding was that in some areas local groceries markets were dominated by single retail chains, restricting the choice available to shoppers. We are still considering our response to that. The second finding was that certain supermarkets' practices passed unacceptable risks or costs on to suppliers—mainly food manufacturers and processors—creating high levels of uncertainty about their income and so limiting their ability to invest and innovate.
The commission proposed a number of remedies and recommendations to address the adverse effects on competition identified. They included a new groceries supply code of practice—GSCOP—for all supermarkets with a turnover of more than £1 billion a year. The Office of Fair Trading will play an important role in overseeing its implementation. Additionally, the commission recommended that the Government establish an ombudsman, as my hon. Friend the Member for Stroud (Mr. Drew) mentioned, to monitor GSCOP and arbitrate disputes between suppliers and retailers.
That is a complex issue, and we have considered the recommendation carefully. My hon. Friend the Minister for Further Education, Skills, Apprenticeships and Consumer Affairs announced on 13 January that he agreed with the Competition Commission that there was a need for a body to enforce the code of practice independently, to prevent retailers from being able to pass excessive risks and unexpected costs on to their suppliers. To support that, it was decided that the ombudsman should also have the important power of hearing anonymous complaints.
The revised code of practice is a great improvement on the current regime. However, the power that large grocery retailers remain able to wield over their suppliers can still create pressures on small producers, especially in these difficult economic times. Ultimately, that may have an impact on consumers.
Food Industry Competitiveness
Proceeding contribution from
Jim Fitzpatrick
(Labour)
in the House of Commons on Thursday, 21 January 2010.
It occurred during Topical debate on Food Industry Competitiveness.
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Proceeding contribution
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504 c463-4 
Session
2009-10
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House of Commons chamber
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2023-12-08 16:44:28 +0000
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