Competition Commission probes retail payments

The Competition Commission has put the finance departments of the UK’s
biggest grocery retailers into the firing line over their payment regimes to
small suppliers.

Following Accountancy Age’s revelation of the extent of the late payment
culture among retailers, the Commission this week asked for details of the
payment report by credit agency Graydon.

The commission is considering the details of the report as part of its
investigation into the groceries market. It is thought that the possible damage
to the supply chain will be a key feature of any investigation. Not only is
supply chain an issue but the investigation will also examine, retail
competition and planning, land use and other barriers to entry.

It will consider whether ‘the behaviour of grocery retailers towards their
suppliers affects competition among suppliers of groceries or other products
sold by the grocery retailers’, and whether the retailers threaten the economic
viability of suppliers or wholesalers, ‘and thus the competitiveness of the
supply chain’.

‘We’re looking to receive evidence in all three areas of the investigation,’
said a Competition Commission spokesman. ‘If [this information] falls under the
supply chain, we’re grateful to those who can help us out.’

The Federation of Small Businesses supported the probe into late payments,
saying that suppliers were being drawn into supplying a small number of
significant contracts that made them vulnerable. ‘Whether it’s happening with
the supermarkets, it’s worth them investigating. Anecdotally it does concern

Accountancy Age’s research, in conjunction with Graydon, focused on the
retail market. Credit experts added this week that the problem of late payment
extended more broadly, too.

Owen James, a director at credit management services business Intrum
Justitia, said that the UK market was getting worse at paying on time, despite
legislation to charge for late payment. ‘There’s a reticence among business to
use the legislation. They think it might upset their relationship with their

Emerging opinion from the commission is expected in December, with
provisional findings to be released in May 2007. The final report is due in
October 2007.

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