The FWD has vowed to keep up pressure on the Competition Commission after it reported wholesalers were being forced to pay far more for products than the big four supermarkets, but failed to propose any action to address this abuse of the supermarket’s dominant position.
The disparity in costs was revealed in the provisional findings of the Commission’s inquiry into the grocery market, published two weeks ago.
John Murphy, director general of the Federation of Wholesale Distributors, said: “FWD’s main concern has always focused on the higher buying prices wholesalers have to pay to manufacturers for goods in comparison with the prices that the major supermarkets can extract.”
He said that the Commission had identified that wholesalers were paying significantly more for products than the big four supermarkets, with unit costs for larger wholesalers nearly 10% higher, and more than 15% higher for smaller wholesalers.
He pointed out that full trunker loads were the most cost effective way for suppliers to deliver their products, but large wholesalers who would be receiving them in exactly the same way as the big four, were being charged up to 10% more.
“There is no justification for this and it is totally out of order. The Commission does not currently see this as a problem, but we will not be satisfied until it does. We need transparent pricing.”
Murphy also attacked proposals in the report suggesting it should be easier to build more supermarkets. He said: “It would work totally against wholesalers’ interests, and those of the independent convenience retailers they serve, by sucking ever more consumer spending away from the wholesale/independent channel.”
But he said there was one positive aspect to the report. “FWD welcomes the prospect of an effective Supermarket Code of Practice that might, at last, bear down on the abuses of retailer buyer power that have been identified.”
Murphy said the FWD would be responding to the report both on its own and as part of the ACS group set up to give a cross industry view.
l See page 10 for analysis of the report