Food manufacturer, Premier Foods, has demanded payment from suppliers to guarantee continued transactions, according to the BBC.
Originally discovered by Newsnight, it has been reported that the manufacturer has received huge sums of money under a scheme referred to as ‘pay and stay’.
In a statement Premier Foods, which produces brands like Mr Kipling, Ambrosia, Bisto and Oxo, said it was positive that the strategy was aligned with competition law rules. However, the government has voiced concerns based on recent reports.
According to the BBC, Newsnight has seen a letter sent by Gavin Darby, chief executive, dated 18 November saying, “We are aiming to work with a smaller number of strategic suppliers in the future that can better support and invest in our growth ideas.”
“We will now require you to make an investment payment to support our growth.
“I understand that this approach may lead to some questions.
“However, it is important that we take the right steps now to support our future growth.”
“We are concerned by recent reports, and are consulting to assess the evidence so we can establish what more we can do.”
Although, when a supplier questioned information concerning annual payments another member of Premier’s staff replied, “We are looking to obtain an investment payment from our entire supply base and unfortunately those who do not participate will be nominated for de-list.”
Bob Horsley, one of the firm’s many suppliers, who has had a contract with Ambrosia in Devon for more than a decade said he was “taken aback” and called the demands “blackmail”.
A representative for the Department of Business Innovation and Skills said: “We are concerned by recent reports, and are consulting to assess the evidence so we can establish what more we can do.
“We are also consulting on whether the biggest companies should be required to report publicly on whether businesses need to pay to be on their supplier lists.”