COMPETITION regulators are set to announce a crackdown on bully-boy tactics from Britain’s biggest supermarkets in their relationships with suppliers.

The Competition Commission is expected to raise the prospect of a ban on so-called retrospective payments to suppliers – a system by which the latter end up giving the retailers discounts for selling their items – when it unveils its preliminary findings from a probe into the sector.

In addition, the commission is expected to raise serious concerns about lump-sum payments demanded by supermarkets for the placement of new products or access to their shelves for existing products.

The watchdog is also likely to call on supermarkets to give suppliers greater certainty by offering them more fixed contracts so they know how much they will be paid and when.

According to a survey released earlier this year by Grant Thorn-ton, the accountant, more than two-thirds of suppliers said they had no written contract, with 23% claiming supermarkets were unwilling to agree written terms. Almost half had no preagreed order-cancellation notice period in place.

City sources familiar with the Competition Commission inquiry also said it would look to strengthen the voluntary code of conduct between supermarkets and their suppliers which was launched after an investigation in 2000 into the sector.

Patricia Hewitt, trade secretary at the time, said: “The success of the code depends on supermarkets and suppliers being reasonable in their dealings with one another, and observing the spirit of the code.

“The code can set a standard for the industry as a whole, enabling it to put its commercial relations on a better footing.”

Well-placed sources said the commission may tighten the wording of the code to better define what is “reasonable” and “unreasonable” behaviour.

The watchdog already flagged its concerns about supermarket-supplier relationships in a paper reviewing the code of practice.

It said: “Our greatest concern . . . is theelement of retrospectiv-ity or uncertainty for suppliers regarding payment terms that many of these practices imply.”

In August, speculation intensified that the watchdog had found a “smoking gun” after unearthing e-mails between supermarkets and their suppliers in which the retailers were said to have threatened blacklisting unless they were given discounts.

Tesco and Asda have handed over millions of e-mails sent in the run-up to a summer £520m price war. Asda and Tesco have both denied any wrongdoing.

The commission, led by Peter Freeman, will not make firm recommendations in its preliminary findings. But it will raise key areas of concern and outline possible remedies. The supermarkets will then be given another opportunity to respond.

Most of the big supermarket chains are braced for the commission to take some action in relation to their dealings with suppliers. Privately, several senior supermarket executives say they expect the commission to tighten the code of practice.

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