The Competition Commission today called on the Government to appoint an ombudsman to stop supermarkets ripping off their suppliers.

The Commission, which has long been at war with the big grocery chains led by Tesco, said it has recommended the Department for Business establish an ombudsman to arbitrate on disputes between retailers and suppliers, and oversee a code of practice.

Commission chairman Peter Freeman said pressure on suppliers from retailers ultimately hurts consumers.

“Our inquiry last year clearly revealed problems that require action and which, if left unchecked, would damage the consumer,” he said. “We continue to believe everyone's interests – and that includes retailers – would be served by tackling a problem that has clouded the industry for many years.

“The current economic difficulties if anything reinforce the need for action. While some retailers have recognised this, regrettably the majority have not. We are left with no alternative but to set out the new code of practice and recommend the Department set up the ombudsman.”

The ombudsman, said Freeman, would cost £5 million to operate. That will be recovered from the supermarkets, according to their size, but also according to the number of complaints they get tangled up in.