FRANCE: UK retailers accused of abuse of power

The UK's major supermarket chains were accused of "consistently committing abuses of retail power" at a major wine conference in Paris earlier this week.

The comments were made in a presentation by the former senior vice president of Southcorp and more recently non-executive director at Evans & Tate, David Combe.

"There is no doubt in my mind that the enemy common to us all is the arrogant customer - especially the UK retailer," he said.

Combe was discussing the problems facing the Australian wine industry with the continuing strengthening of the Australian dollar.

"Such is the arrogance of the UK retailers that today, with the exchange rate going against their major suppliers, they consistently commit abuses of retail power which, quite frankly, if committed in Australia would represent major breaches of the Trade Practices laws, and almost certainly result in the offending corporation  being fined massively, and the offending individuals quite probably being invited to enjoy the hospitality of HM Prisons," he said.

He went on to give four examples where retailers in the UK, allegedly, changed the terms of agreements with suppliers to the major detriment of the supplier. One, he said, saw a supplier and retailer agree a promotion at £2 off to sell 40,000 x 12 bottle cases which the retailer took delivery of.

Unilaterally, the retailer then decided to change the rules for the promotion to just £1 off, Combe said. However, the promotion failed to sell through all stock, achieving just half of the projected sales. Post-promotion the retailer called on the supplier to come and collect the 20,000 cases remaining unsold.

"What does the supplier do? In a tough environment it has little choice but to comply, or risk losing hard won, and very necessary, retail listings," Combe said.

A second example he cited, allegedly, saw a supplier set aside large quantities of bulk wine at the request of the retailer who kept deferring the promotion it was meant for.

Combe explained: "Eventually, when the supplier must empty tanks in preparation for vintage it is forced to approach the retailer whose response was, 'We'll take delivery of it, but only on consignment. And by the way, if we do decide to use it your Listing Fee will be 30,000 pounds'. The only good news for the supplier is that in this instance it had not packaged the product in readiness for the promotion that never would be. How many of our companies have been left with stock packaged at the request of a UK retailer, but never taken by them?"

Combe concluded: "The point about all this is that we [Australians] have always found curious the system in the UK which institutionalises differential pricing to customers; a system of retail price maintenance which if practiced in Australia or the US would have you put away! But the abuse of retail power - in respect of the wine sector, anyway - has reached proportions which make one ponder whether there are any Fair Trading provisions as far as suppliers are concerned, and how a Government can stand idly by while abuses get worse and worse."