Controversial UK supermarket probe opens

By Anita Awbi

- Last updated on GMT

Related tags: Oft, Supermarket, Wal-mart

Following nearly four years of pressure, Britain's Office of Fair
Trading (OFT) has finally agreed to refer the grocery sector to the
Competition Commission (CC) for an in-depth enquiry.

Today the OFT has officially succumbed to demands by MPs, retail and supplier organisations, environmental groups and local protestors, to investigate the anti-competitive practices of the grocery market's biggest players.

For the first time Britain's 'top four' -- Tesco, Asda, Sainsbury's and Morrison's -- will be subject to a far-reaching probe into market dominance, land bank practices and pricing strategies.

The decision comes after years of political and industry wrangling that has polarised opinion on the issue.

"The OFT could not ignore the variety of calls to look into this. They made the right decision to take a closer look,"​ Shane Brennan of the Association of Convenience Stores (ACS) told FoodandDrinkEurope.com.

"We are going to make a very strong case for the enquiry. It's going to be a long two years,"​ he added.

Together the big four currently control 74 per cent of the grocery market, according to TNS figures. Many critics accuse the supermarkets of using their power to squeeze suppliers, pressurise local council planning departments and push smaller competitors out of the market.

Following an official complaint from the ACS in November 2002, the OFT has been under growing strain to address these issues.

Although the government office declined to refer the grocery sector for further scrutiny by the CC last August, the threat of ACS legal action promptly reopened the case.

"I think we took the view all along, with colleagues like Friends of the Earth, that we weren't going to allow the August decision to remain. I think we've managed to achieve what we wanted today,"​ Brennan said.

The ACS originally complained to the OFT that high street monopolisation by the likes of Tesco has distorted the market, forcing nearly 2000 independent convenience shops into receivership over the last year alone.

But following the regulator's reluctance to act, a group of MPs offered their support, calling for a new retail watchdog and a halt to further mergers pending new government guidelines.

They issued a report, called High Street Britain: 2015, painting a bleak picture for the future of small independent food retailers struggling under conventional and anti-competitive supermarket strategies.

However now the OFT has agreed to act, its position as the only retail watchdog may have been secured.

Related topics: Market Trends

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