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Credit Management Specialist Graydon UK Reacts to Groceries Market Investigation Final Report

Graydon UK one of the UK’s leading credit management and reference agencies today called upon the Government to extend the new protection recommended by the Competition Commission as part of its final report in its inquiry into UK groceries retailing to be applied to suppliers' relationships with all major retailers and not limited to supermarkets.

Despite welcoming the findings of the final Competition Commission report, Martin Williams, Managing Director of Graydon UK, believes that the report's move to prohibit supermarkets from retrospectively adjusting their terms of supply should be applied throughout the entire retail sector.

Martin Williams said: "Today's report is fantastic news for those suppliers who have previously been subjected to widespread bullying by supermarkets. However, whilst there's little doubt that the likes of Tesco, Asda, Morrison's and Sainsbury's have been guilty of bad trade practices such as making retrospective adjustments to the terms of supply without consultation; the Government needs to go further.

"For example, it's only a matter of weeks since Boots kicked its suppliers in the teeth with the news that it was unilaterally extending its payment terms to 75 days from the end of the month in which suppliers' invoices were issued and BHS, B&Q and Debenhams are also amongst the High Street names who've arbitrarily enforced lengthened payment terms upon suppliers in recent times.

"If the new recommendations protect suppliers in their relationships with the supermarkets, it's surely only a logical extension that they should protect relationships with all other major retailers too.

Graydon UK also welcomed the Competitions Commission's move to ensure that retailers are required to keep written records of all agreement with suppliers on terms of supply. This will protect suppliers against Pay and Deduct, a common retail industry practice whereby major suppliers partially withhold the payment of supplier invoices whilst claiming that agreed prices have not been loaded correctly into their systems before invoices are issued.

Martin Williams added: "I hope that the report sounds the death knell for the practice of Pay and Deduct, which has for too long prevented suppliers from receiving monies which are rightly theirs whilst queries are investigated. Supermarkets will no longer be able to use this as an excuse to delay payments, which can only be good news for suppliers from a cashflow perspective.

Graydon UK also believes, however, that today's report underscores the failure of The 1998 Late Payment of Commercial Debts (Interest) Act to provide adequate protection for suppliers.

Martin Williams concluded: "The creation of an Ombudsman service, combined with the revision of the Groceries Supply Code of Practice proves once again that the 1998 Act simply hasn't worked and has enabled retailers to get away with a range of supply chain trade practices that transfer excessive risks and unexpected costs to suppliers, including the habitual late payment of invoices.

"The 1998 Act is now outdated and in need of a complete overhaul to protect the interests of suppliers in today's challenging economic operating environment."

About Graydon UK
Graydon UK is one of the leading database information providers specialising in credit risk management. The company helps clients reduce the uncertainty of doing business by providing a complete, differentiated and high-quality package of credit risk management services. Graydon provides access to credit information and reports on companies in more than 130 countries worldwide. The Graydon group is owned by Atradius, Coface and Euler Hermes, three of Europe's leading credit insurance organisation.


Lundi 2 Juin 2008

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