The OFT said it had received 29 responses to its invitation for comments on the findings of an earlier audit in March, but that it had not received any evidence that that the code is being breached or that competition in the market is being distorted. Consequently, it did not believe that there were grounds for referring the market to the Competition Commission.
The OFT warned that the code was not put into place to shield suppliers from hard bargaining or to ensure suppliers' deals with supermarkets are honoured.
However, the OFT said the code could be used more effectively to resolve disputes between supermarkets and suppliers if both parties made more use of written records to document their dealings with each other.
OFT chairman John Vickers said: 'Natural justice and common sense do not allow regulatory intervention in markets without proper evidence. Our review has not yielded substantive evidence to show that the code is being breached or that competition is being restricted.'
One analyst observed that the lack of evidence that the code isn't working might be due to a reluctance among suppliers to put themselves in the firing line for fear of reprisals by the supermarkets.
Seymour Pierce head of equities Richard Ratner said of the OFT's conclusions: 'Not surprising really, because any supplier who has a problem is highly unlikely to invoke the procedure unless it wishes to no longer be a supplier.'
Sainsbury's has responded to the OFT announcement with the claim that it treats its suppliers fairly. It said: 'The OFT compliance audit confirmed the findings of its review last year, that we deal with suppliers in a fair and reasonable way.'
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