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Living up to the rhetoric -2

The subsequent full report from the Competition Commission was published in 2000. It provided a sad indictment of the supply chain management practices implemented by the major supermarkets. The Competition Commission (2000) reported that they had received many allegations from suppliers about the behaviour of the ‘main parties’ in the course of their trading relationships. They further commented that most suppliers were unwilling to be named, presumably in fear of commercial retribution. The Competition Commission report referred specifically to a ‘climate of apprehension’ which seemed to prevail among many suppliers in their relationship with the big supermarkets. The Competition Commission investigators had put a list of 52 alleged practices to the main parties. They found that a majority of these practices had been carried out by many of the main parties. The practices of concern included:
‘ requiring or requesting from some of their suppliers various non cost-related payments or discounts, sometimes retrospectively; imposing charges and making changes to contractual arrangements without adequate notice; and unnoticeably transferring risks from the main party to the supplier.’
The point was further made that Asda, Safeway, Sainsbury, Somerfield and Tesco possessed sufficient buying power such that the practices were not only distorting competition, but were also adversely affecting the competitiveness of some of the suppliers. The Competition Commission’s report concluded with the recommendation that the most effective way of addressing the adverse effects of the cited practices would be a Code of Practice. Most damningly of all, it was emphasised that a voluntary code would not be adequate. Coming from the notoriously toothless Competition Commission these were strong words indeed. The overriding message was that the big supermarkets were not to be trusted.
The impact of the publication of the Competition Commission’s report on the debate about partnering in the construction sector was precisely zero. The perceived legitimacy of the big supermarkets to preach partnering to construction firms remained remarkably intact. It cannot of course be assumed that the supermarkets were consistent in their dealings with different sectors. Neither can it be assumed that contractors would have suffered any adverse effects even if such practices prevailed in their dealings with the construction sector. But if the findings of the Competition Commission are taken at face value, it does demonstrate the difficulties of achieving the required ‘culture change’ which was widely held to be an essential pre-requisite of successful partnering. If the self-proclaimed ‘enlightened clients’ could not incubate the desired culture of teamwork and trust within their own organisations, there would seem to be little chance of any wide scale culture change within the diverse and hugely fragmented construction sector.
It should also be reported that ultimately no action was taken to implement the Competition Commission’s recommendation for a compulsory Code of Practice. The issue was very quickly forgotten. The New Labour government continued to nurture their close relationship with big business in the cause of wealth creation. The buying public continued to vote with their feet by purchasing an ever-increasing proportion of their weekly shopping in the big supermarkets. Few seemed to care about ‘adversarial practices’ in the retail sector provided the goods on the shelf offered value for money. Meanwhile the major clients of the construction sector continued to advocate partnering in the cause of lower costs. Adversarial practices in the supply chain were seemingly acceptable provided they were adversarial practices aimed at others.

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Name: gala2

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