The Competition Commission will tomorrow press ahead with a plan to create a specialist ombudsman to settle disputes between supermarkets and suppliers as it reports the findings of a two-year investigation into the grocery market.

However, the new office - dubbed Offshop - already looks being derailed by a lack of cash.

Government ministers have made clear there is no taxpayers’ money to create the new body and supermarkets last night said the extra layer of red tape could push food prices higher.

Besides Tesco, Asda, Sainsbury’s and Morrisons, Offshop will be able to investigate any complaints against Waitrose and Marks & Spencer under an extended code of practice.

The Commission is also likely to call for tougher planning guidelines today to curb the spread of so-called ‘Tesco Towns’, but is unlikely to force supermarkets to dispose of stores or to end below-cost selling.

Consumer groups last night said they feared the watchdog’s investigation, its fourth into the grocery market over the past decade, would prove to have been a waste of time.

James Lowman, chief executive of the Association of Convenience Stores, said: “If the outcome is what we expect then I’m afraid our view will be that we wanted far more than this. It’s a massive missed opportunity. ”The Campaign to Protect Rural England said if the Commission stuck by remedies outlined in February, it would be condemning local shops to oblivion.

The Commission is expected to recommend that the new ombudsman should be funded by industry despite furious lobbying behind the scenes by the supermarkets.

If it fails to win voluntary support from the grocers, the Department for Enterprise, Business and Regulatory Reform has indicated it will intervene.

The department will be responsible for introducing new laws needed to create the regulatory body which is to have sweeping powers to name and shame companies and to impose penalties. These could range from a reprimand to punitive fines.

Another option is for the Office of Fair Trading to take on this role or for ‘Offshop’ to operate from its premises and use its administrative staff.

The ombudsman will apply only to food retailers but the Commission recognises that the market may be distorted by other large food purchasers in the country - the processors, abattoirs, food service industry and wholesalers.

The watchdog wants the new regulator to investigate any other complaints from other players in the supply chain.

Supermarket chiefs are convinced such a body will work against consumer interests and force up food prices.

One retail insider said: “This is just an expensive new layer of bureaucracy. The official will have to have an office and staff and will have to justify his existence.

“Supermarkets are trying to get a fair deal for consumers but with this they won’t have the same freedom to negotiate with suppliers and so prices will rise.”

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