Tesco escapes new regulator threat

CONCERN about supermarkets' effect on the competition or their suppliers is 'not enough' to justify setting up an independent regulator to monitor the situation, the Government declared today.

The decision will come as a relief to the 'Big Four' retail groups ? Tesco, Asda, J Sainsbury and Wm Morrison ? which have faced mounting criticism from consumer groups about their impact on competition in the groceries market. Suppliers have also complained about harsh terms imposed on them by the major retailers, but many have proved too nervous to go public with their claims.

Trade Minister Alun Michael described the idea of setting up an independent regulator to protect suppliers as 'very bureaucratic'.

Labour MP Keith Vaz, however, said the Government should not 'just sit back' and allow the current dominance to continue in a free market. He added: 'Companies like Tesco are behaving like pit bull terriers; they have a dominant position in the market; they are controlling the market; they have done huge damage to our high streets and they are forcing suppliers to reduce their margins and this costs jobs.'

Liberal Democrat MP Alistair Carmichael said many suppliers were too afraid to speak out in case they lost their contracts. He said demands for the creation of an independent regulator that will investigate complaints confidentially and anonymously and will protect complainants against any reprisals to be taken by the supermarkets would follow recommendations from bodies such as the National Farmers Union of Scotland.

But Michael said: 'It sounds a very bureaucratic response. The audit of competition issues that was undertaken for the OFT doesn't show evidence of a failure that would require intervention.

'The supermarket code can only be really effective if suppliers use it; the OFT can only take action under the code if there's firm evidence of problems. It would be wrong to over-regulate without evidence of the need to do so.'