Supermarkets in the UK should pay for an independent Ombudsman to protect their suppliers against exploitation, the Competition Commission has told government.
The Commission has been trying since February to force Tesco, Sainsburys, Asda and others to agree to an independent regulator. All remain strongly opposed to the plan.
It has now asked the Secretary of State Peter Mandelson, as the Minister for the Department for Business, Innovation and Skills (BIS), to intervene and create a compulsory Ombudsman.
The Commission said the new regulator would cost around £5 million a year and compared modestly to the annual turnover of £70 billion in grocery suppliers to retailers.
However, the British Retail Consortium (BRC) which represents the interests of supermarkets, said an Ombudsman was an 'unnecessary cost'.
'Most supermarket suppliers are multinational food businesses perfectly able to stand up for themselves. Retailers are right to defend customers' interests by negotiating robustly with them.
'We have seen no evidence to support claims that retailers are unfairly putting the squeeze on their suppliers,' said British Retail Consortium Food Director Andrew Opie.
NFU president Peter Kendall said farmers welcomed the recommendation for a regulator and said there was, 'no logical reason' for the government not to agree to it.
Supermarkets still remain optimistic that the government will reject the proposals.
'In his time as the EU trade commissioner, Lord Mandleson demonstrated he was a supporter of free trade and markets working in the interests of consumers,' said a BRC spokesman.