FPB defiant over supplier row with Sainsbury boss

Business pressure group, the Forum of Private Business (FPB), is today publishing correspondence between itself and the boss of J Sainsbury, Justin King, over an attempt by the supermarket giant to silence criticism of its treatment of suppliers earlier this year.

The row centres on an article published in the Grocer magazine, in which the FPB accused Sainsbury of attempting to 'rip up' existing contracts with 1,400 of its suppliers and impose onerous, non-negotiable new payment terms on them (see notes to editors).

This prompted Sainsbury CEO Justin King to write to the FPB to complain that its comments were 'provocative and untrue'. The FPB responded to Mr King, standing by its comments, informing him it would not make further comment for seven days to provide Sainsbury with an opportunity to come forward with fresh evidence.

The FPB's Chief Executive Nick Goulding said, as he received no further correspondence from Mr King, he can only conclude Sainsbury accepted its criticism of the FPB is unfounded.

"The FPB has nothing to apologise for and refuses to be intimidated, silenced or gagged by Mr King - especially as he has his facts wrong,' he said. "We refute Mr King's criticism that it was 'untrue' for the FPB to say Sainsbury tried to 'rip up' existing agreements with suppliers. This is, in effect, what Sainsbury tried to do and it absolutely must not be allowed to get away with saying otherwise."

Mr Goulding said Mr King's letter was bullying in tone and was followed by a phone call to the FPB's head office to query whether the FPB would be responding within seven days as Mr King demanded.

"We have a simple message for Mr King,' he said. "Your bully boy tactics will not work on us. The FPB will fight for smaller businesses to ensure they are treated justly, fairly and honestly. Sainsbury stepped out of line earlier this year and it rightly backed down. It must not be forgotten that, in March this year, the Office of Fair Trading (OFT) published a review of the code of practice set up three years ago to crackdown on the unfair practises of supermarkets. The OFT admitted it was aware of allegations of abuse, but had no choice but to exonerate the supermarkets because of a lack of evidence attributable to suppliers for "fear of complaining". That is why it is critical that the FPB makes a stand on behalf of suppliers and refuses to be cowed by the likes of Mr King. "

Notes
1) The Guardian newspaper reported on 3 March 2005 that about 100 suppliers had complained after Sainsbury wrote to 1,400 suppliers to inform them it would now pay suppliers up to four weeks later than previously agreed. A Sainsbury spokeswoman confirmed to the Guardian that the terms were non-negotiable.

Four days before the new regime was due to be imposed, the Guardian reported that Sainsbury was postponing the introduction of new payment terms. This move came after the Office of Fair Trading (OFT) intervened after being contacted by the Fresh Produce Consortium and the National Farmers Union, which had been contacted by angry suppliers. Sainsbury, having said the move was non-negotiable, said it had now written to suppliers who had complained in an attempt to reach a negotiated settlement.

(2/6/05)