OFT turns down open books offer from FWD

The Office of Fair Trading wants wholesalers to delay a move to compare wholesalers’ cost prices with those obtained by the big four – until and if there is a market review.

But the Federation of Wholesale Distributors is protesting that the comparison should take place first because it would produce the evidence to spark a market review.

It says the price differentials are the seed from which the market domination of the big four springs.

The FWD proposed the price comparison in November in the later stages of the PKF audit of superstore buying deals. The PKF report subsequently cleared the big four of abusing their buying power.

The audit followed the OFT review of the Code of Practice for Supermarkets which has been found to be worthless because suppliers were scared of complaining for fear of retribution.
John Murphy, director general of FWD, told ProWholesaler: “It seems very reasonable to ask for this comparison. Four wholesale operations have agreed to open their books to OFT appointed accountants. OFT could update its scan of big four prices simultaneously.

“We appreciate that superstores achieve lower prices because of their volume. What we say is that there is a belief that the differentials are not proportionate.

“In other words, even wholesalers buying large volumes of product do not achieve equitable, as distinct from the same, terms.

“We do not blame suppliers. They have to live. But there is a flaw in the pricing structure of the total market that means there is discrimination against wholesalers and therefore the independent retailer.

“The extent of this flaw would emerge by comparing terms. You don’t need a market review to instigate this,” he said.

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