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LONDON - Britain's four biggest supermarket chains on Tuesday signed a code of practice intended to prevent them from abusing their power over suppliers, Reuters reports.
Tesco Plc, J. Sainsbury Plc, ASDA and Safeway Plc have agreed to follow a code that was written by the Competition Commission. The code was drawn up after the commission conducted an investigation of the industry and determined that big food retailers should be governed on supply chain relations. The commission concluded that supermarkets were not overcharging customers, as some suspected.
The code is intended to encourage "mutually beneficial agreements" to be agreed by supermarkets and suppliers, and the retailers would have to give advance notice of changes or compensate the suppliers.
Any complaints about breaches would first be discussed by the parties involved. Then if they failed to agree, an independent mediator could be called in and after that the Office of Fair Trading would investigate.
The code was drawn up by the Director General of Fair Trading, but has been criticized by the National Farmers' Union.
The group complained that the thousands of farmers who do not supply the "big four" chains would get no protection.