An independent ombudsman could be appointed to oversee supermarkets’ relations with suppliers, the Competition Commission is expected to suggest in a report to be published on Wednesday.

The proposal will be one of a number of suggested remedies to perceived competitive issues identified by the regulator after an 18-month review. The commission has raised concerns about a voluntary code of practice that was introduced to protect suppliers in 2000. Only a tiny number of complaints have been filed under the code because suppliers are afraid that they will lose business if they come forward.

This week’s report is a month later than expected, having been delayed by the need to sift through millions of e-mails between supermarkets and their suppliers in a search for evidence of abuse of the code.

Peter Freeman, the commission’s chairman, is also expected to suggest changes to the planning system to try to increase local competition in towns that have become dominated by one chain, such as the so-called Tesco Towns of Inverness, in Scotland, and Bicester, in Oxfordshire.

Research by the watchdog found that 36 per cent of the big four chains’ stores have no more than two rivals within a ten-minute drive and nearly 100 big stores have no large competitor within a ten-minute drive.

In tune with recommendations in the Government’s Planning White Paper, released in May, Mr Freeman is to propose ditching the so-called “needs test”, under which supermarket chains must prove that a new outlet is needed on the outskirts of towns before they can receive planning approval. Instead, it will argue that competition could be encouraged by the introduction of a “fascia” or competitor test, which would encourage preferential treatment for retailers without a presence in an area.

The needs test is seen to hand a big advantage to the incumbent large retailer in any town, and the watchdog found that it was a “barrier to competition” in 40 local authority areas.

The withdrawal of the test is likely to be opposed by independent retailers in town centres, who it is designed to protect. However, a commission working paper suggests that small stores are thriving despite a 13 per cent rise in supermarket sales space in the past seven years. Research found that the number of independent stores rose when a supermarket opened in an area.

The watchdog is investigating whether the increasing power of the four biggest supermarkets, in particular Tesco, is having a negative impact on suppliers and shoppers. It has also examined whether stores are preventing new competitors entering local areas by holding on to land and manipulating the planning system.

Supermarkets are set to be criticised for holding on to development sites for longer than necessary to keep out competitors and for the use of “restrictive covenants”, under which stores or land is sold under condition that they are not used by rivals.

The commission’s report is also expected to include a review of the Government’s “town centre first” planning policy, which aims to protect town and city centres from the overexpansion of out-of-town superstores.

The commission cannot demand changes to planning law, but its recommendations will feed into the review under the White Paper. Although it will not publish its final report until next March at the earliest, this week’s report will indicate the watchdog’s key concerns and suggested remedies.

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive