Grocery market report findings slammed

30 April, 2008

Rival supermarkets should be given more power to open up in towns dominated by one chain, the Competition Commission has recommended.

In its final report into the UK grocery market, published today, the Commission concluded that supermarkets were giving a good deal to consumers, but that more needed to be done to improve competition in local markets and to address relationships between retailers and their suppliers.

Following the conclusion of the two year inquiry, the Commission is also recommending a strengthened grocery code of practice and the appointment of an independent Ombudsman to oversee and enforce it.

Commission chairman Peter Freeman said: “We have looked extensively and listened very carefully when looking at all the matters raised with us but our overriding concern throughout has been whether the market is working well in the interests of consumers.

“In many important respects, consumers are receiving the benefits of competition, such as value, choice, innovation and convenience, but we need to take appropriate action to address those areas where they could be served better and where their interests could be damaged in future. We have been very careful to ensure that our actions match the scale of the problems we have identified.”

However, the report was criticised by the Association of Convenience Stores who said it failed to support choice and diversity.

Chief executive James Lowman said: “The overriding failing of this inquiry is that the Commission views competition in the grocery market as competition between the big four retailers. This approach ignores the critical need for a variety of retailers and supply chains. It is out of kilter with consumer trends towards more local shopping, and neglects the needs of many groups of consumers whose requirements are not properly met by the big four superstores.”

Lowman also said the Commission had overlooked big issues flagged up in the report such as below-cost selling of alcohol, a practice which supermarkets had admitted they did in the report's provisional findings released last year.

He said: "It has ignored significant amounts of below cost selling and aggressive pricing behaviour, and the alarming trend of consolidation in the number of stores built, and acquired, by an ever smaller number of large companies."

The Commission said there had been no evidence found that independent retailers and wholesalers supplying them were in "terminal decline".

Freeman said: "It is not impossible for them to compete and in the current economic climate the benefits of vigorous competition are as relevant as ever."




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