Watchdog promises swift end to supermarket study

By Anita Awbi

- Last updated on GMT

Related tags Supermarket

Britain's Competition Commission (CC) has pledged to act quickly on
its supermarket investigation, appealing to aggrieved parties to
forget general grocery sector gripes and come forward with specific
evidence of anti-competitive behaviour.

The watchdog's inquiry will examine the relationship between retailers and suppliers, the entry of the "big four" supermarkets (Tesco, Asda, Sainsbury's and Morrison's) into the convenience sector, price-flexing and below-cost selling, and ways in which planning law is applied to the market.

Supermarkets and lobbyists are busy gathering evidence to strengthen their case ahead of this month's CC hearings, which will continue throughout the summer until September.

The official findings into Britain's £95bn grocery sector will be published within the next 18 months.

But the CC said in an issues statement it will rule out areas of public concern not directly linked to competition, including environmental impact, employment conditions in overseas suppliers, and the effect of the supermarket on the High Street.

"We know there are many issues of more general public concern surrounding the grocery market. We will listen to evidence on these, but our concern must be with their impact on competition; we hope those who provide evidence to us will focus on that,"​ said inquiry chairman Peter Freeman.

The CC has also ruled out investigating the non-food side of UK supermarket business, arguing the food market gives "sufficient basis to conduct a comprehensive investigation".

The Association of Convenience Stores (ACS), which first pushed for a comprehensive probe, is pleased with the inquiry's remit however.

"This is exactly the sort of inclusive and thorough review that we have been asking for. The Commission is looking at the market from top to bottom, from issues around buying power and the relationship between retailers and suppliers, through to the pricing tactics that we believe can amount to predatory pricing,"​ said ACS public affairs director James Lowman.

"We welcome this statement of issues, in particular its emphasis on the way in which the market serves the consumer. We contend that the reduction in choice and the concentration of buyer power in only a few hands is damaging to consumer interests,"​ he added.

The organisation will be working closely with the commission throughout the inquiry.

The study will cover some of the same ground as the CC supermarket report of 2000 which led to the creation of a voluntary Supermarket Code of Practice (SCOP).

This time round an assessment of the SCOP's ability to correct market distortions and influence supermarket policies will be made.

Under the Enterprise Act 2002, the commission has powers to identify features affecting competition in any market grocery suppliers operate, and can advise government on necessary regulatory steps which may be deemed necessary to correct the situation.

Tesco, Britain's largest supermarket with 31 per cent market share, said the inquiry was not unexpected, but added "we know that up and down the country millions of ordinary consumers vote with their feet when they go shopping. They have a choice and it is one they exercise every day.

"But we also know that some people have concerns and this inquiry gives us an opportunity to listen to those and address some of the myths surrounding our industry. We will also reiterate that the consumer in every walk of life benefits from the choice, value, quality, convenience, range and service that supermarkets like Tesco provide."

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

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