The government has announced a new ombudsman to enforce its groceries supply code of practice, which will cover supplier issues such as late payment and retrospective pricing and consumer complaints.

Gill Grifffin, owner of school uniform shop Early Years, says: ‘This move is just what we need. Supermarkets unfairly squeeze suppliers and make it hard to compete by running loss leaders, which portray small retailers as expensive. Hopefully a watchdog will curb some of these practices.’

The Forum of Private Business says the decision is a welcome move. Phil Orford, chief executive of the FPB, adds: ‘Small suppliers and retailers continue to suffer as a result of supermarkets’ anti-competitive practices. One of the main problems is that many suppliers feel intimidated into silence and do not speak out; a situation we need to change.’

The body is calling for a guarantee of anonymity for suppliers wishing to complain about poor treatment. In a survey from the group, 74 per cent of respondents said they would want anonymity when giving evidence.

According to the Competition Commission, between 1999 and 2006 the entry of supermarkets into town centres caused more independent grocers to close than new retailers to move in.

However, the British Retail Consortium has expressed concerns that the decision will lead to an unnecessary and costly new bureaucracy.

The watchdog will come into force on 4 February.

See also: Small businesses v supermarkets