Supermarket competition

The UK grocery market is set to be investigated by the Competition Commission.

The investigation has been announced by the Office of Fair Trade after criticisms of the 'big four' supermarkets' dominance of the market.

Critics accuse the supermarkets of driving small businesses out of the high street and out of business

Stakeholder Response: Federation of Small Businesses

Carol Undy, FSB national chairman, said: "This inquiry is not a moment too soon.  When supermarkets, convenience stores and branded petrol stations are considered together, there is little doubt that there is a dominant position being taken by the big four supermarkets in the grocery sector.

"However, the OFT recommendation to the Competition Commission is, in our view, too narrow. 

"As well as the planning regime and property management of the big four there are other matters to consider. 

"The issue of parking for independent retailers, compared to free car parks outside supermarkets, as well as the treatment of small suppliers should also be closely examined.

"After the issue was raised in prime minister's questions yesterday we are pleased that prompt action has been taken. 

"We look forward to contributing fully to the Competition Commission investigation."

Stakeholder Response: British Retail Consortium

BRC director general Kevin Hawkins said: "Much of the content of this report is very favourable to supermarkets and acknowledges that competition has delivered major benefits to consumers.

"This is particularly obvious in the convenience sector where, as the report notes, the 10 per cent market share held by multiple retailers has greatly improved the quality of the offer to consumers.

"We also note the report's concern about the planning system as a barrier to entry by smaller competitors into the sector.

"All retailers, however, are obliged to work within the system as it is, with all its imperfections, and the Competition Commission has on previous occasions declined to pursue this issue.

"Should the enquiry go ahead, the supermarkets involved will of course, continue to extend the fullest co-operation to the Commission as they have nothing to hide. 

"We would expect that the outcome of any enquiry will, yet again, confirm the benefits of supermarket competition to consumers."

Stakeholder Response: The Association of Convenience Stores

Association of Convenience Stores chief executive David Rae said: "This is a landmark ruling for independent retailers and consumers.

"The OFT’s decision comes after evidence presented by ACS, suppliers, consumer organisations and environmental groups highlighted the problems caused by the growing dominance of the big four superstores. 

"The decision vindicates ACS’ legal challenge to the OFT after the regulator had initially rejected calls for a full market investigation.

"The public, parliamentarians and industry experts have been calling for some time for the market to be investigated, and we are delighted that the Competition Commission have been given the opportunity to take a fresh look at the market.

"The referral has been made primarily on the basis of the issues we raised. 

"Buying power, below cost selling, price flexing, and the decline in choice caused by the closure of many independent shops are all identified in the OFT’s decision, and these are the issues that the Competition Commission needs to address. 

"The grocery industry is one that all of us use and rely on in every day life, and it is absolutely right that the authorities take a long hard look at these issues."

Stakeholder Response: Which?

Alena Kozakova, principal economist at Which?, said: "We welcome the OFT’s decision and believe their intention to focus their investigation on issues such as planning and land is the correct one, based on solid evidence.