§ Mr. SayeedTo ask the Secretary of State for Trade and Industry (1) what assessment her Department has made of the effects of below-cost selling by supermarkets; [125683]
382W(2) what assessment her Department has made of the impact on the UK grocery retail sector of introducing measures to (a) prohibit below-cost selling by supermarkets and (b) to ensure transparency in contracts between supermarkets and supplies; [125684]
(3) what measures her Department will take (a) to ensure transparency in commercial dealings between supermarkets and their suppliers and (b) to prohibit below-cost selling by supermarkets. [125685]
§ Mr. Sutcliffe[holding answers 14 July 2003]: The Competition Commission (CC) monopoly report `Supermarkets: A Report on the Supply of Groceries from multiple stores in the United Kingdom' was published on 10 October 2000. The CC concluded that the practice of persistent below-cost selling when conducted by supermarkets with market power, operates against the public interest. However, the CC stated that remedies to prevent below cost selling would require monitoring and intervention that would be disproportionate to the adverse effects they were designed to remedy. Therefore the CC made no recommendations for remedial action.
Following the CC's report, the four supermarkets with a market share of 8 per cent. or over (Sainsbury, Asda Wal-Mart, Tesco and Safeway) gave legally binding undertakings to comply with a Code of Practice governing relations with their suppliers. The Code is intended to provide a framework for dealings between supermarkets and their suppliers. Terms of business must be transparent and available in writing.
Supermarkets will not be able to change agreed terms without giving the supplier notice or compensation. The Code also includes a provision for an independent mediator, paid for by the supermarkets, to resolve disputes about the Code if the parties cannot do so themselves.
The Office of Fair Trading is currently reviewing the Supermarket Code o [Practice. They are expected to report later this summer. My right hon. Friend, the Secretary of State for Trade and Industry will wait for the results of that review before deciding if any action is necessary.
§ Mr. SayeedTo ask the Secretary of State for Trade and Industry (1) if she wit take steps to replace the supermarket Code of Practice with a statutory requirement for suppliers to offer the same contractual terms to all grocery retailers; [125681]
(2) what measures her Department will take to revise the Supermarket Code of Practice. [125682]
§ Mr. Sutcliffe[holding answers 14 July 2003]: Under UK competition law it is the responsibility of the Office of Fair Trading to review undertakings which arise from adverse findings in a monopoly investigation. The OFT is currently reviewing the Supermarket Code of Practice. They are expected to report later this summer. My right hon. Friend, the Secretary of State for Trade and Industry will wait for the results of that review before deciding if any action is necessary.