Supermarket competition

ePolitix.com Stakeholders respond to news that the Competition Commission is to focus at the local level in its probe into the grocery industry.

 

Government Response: DTI

A spokesman for the DTI said: "This is primarily a matter for the competition authorities - the government has no direct role in the inquiry, but we welcome the publication of the Commission’s emerging thinking.

"We encourage those with views on what the Commission has said to respond to the Commission’s invitation to comment. "

Party Response: Liberal Democrats

Liberal Democrat Defra spokesperson Roger Williams said: "This report does not propose major changes.

"Once again farmers and consumers have been let down.

"The current Supermarket Code lacks real teeth.

"There should be an independent inspector with the power to take action where anti-competitive practices are taking place.

"The report is right to criticise Tesco for building significant landbanks.

"Large chains must not be allowed to push specialist stores and village shops out of business, as they are necessary to create sustainable communities.

"Local people should be able to make decisions on the right balance.

"We will be resubmitting evidence and calling for more action to make all players in the supply chain accountable."

 

Stakeholder Response: Association of Convenience Stores

 

ACS chief executive James Lowman said: "We are encouraged by this statement by the Competition Commission.

"They have identified strong indications of anti-competitive practices in the UK grocery market that need further detailed consideration. 

"Overall we are one step closer to a fairer grocery market.

"However, what is clear from the emerging thinking is that in some areas the Commission still needs to go out and find crucial information. 

"For example, their analysis of the relationship between retailers and their suppliers has not gone far enough.

"They must probe this issue much further in order to fully understand how buying power operates and how it ultimately damages competition and the consumer."

 

Stakeholder Response: FSB

Clive Davenport, FSB trade and industry chairman, said: "We have serious concerns about reports of blatant abuses of the planning system by supermarkets, which the Competition Commission has failed to address in numerous inquiries in the past.

"This time round no stone should be left unturned and offenders should be brought to book.

"Independent retailers cannot compete for goods if supermarkets sell them to the public at lower prices than independent retailers can buy from wholesalers. 

"This is unfair competition and should be stopped.

"However, we welcome plans to look in more detail at competition at the local level. Independent retailers have a lot to offer in terms of local products, personal service and consumer choice.

"Unfair or illegal competition is not acceptable and it is essential that the Competition Commission does its job properly to stamp it out.

"On the evidence of today's initial findings, it does not look promising."

 

Stakeholder Response: British Retail Consortium

BRC director general Kevin Hawkins said: "This is the third investigation in seven years which has found no evidence to support claims that retailers are unfairly putting the squeeze on their suppliers. I think it is time we put the issue to bed.

"We acknowledge there are some sectors, particularly the dairy industry, that are failing to keep pace.

"In these sectors there is a need to restructure, which hasn't been brought about by excess competition but by a failure to adapt to both consumer demand and reform of farm subsidies.

"The Competition Commission's report makes it clear that consumers have benefited enormously from a competitive grocery sector, with food prices falling by seven per cent in real terms since 1999.

"Unlike utilities, council tax and fuel food is the only regularly purchased household item which costs less now than it did eight years ago.

"It is competition between retailers which has made that happen.

"Clearly the Commission has a lot more work to do but ultimately it is the interests of consumers that must be served.

"It is their interests that must form the foundation of any final recommendations.

Stakeholder Response: CPRE

A CPRE spokesman said "The Competition Commission's inquiry is now entering a critical period. 

"CPRE wants its final report to act or recommend action that will stem the remorseless growth of superstores and the big retailers that dominate food shopping and to support remedies that offer a real choice of shops with accessible, affordable local food for local communities.

"In its groceries market investigation emergent thinking report published today, January 23, the Commission sets out a summary of its current thinking.

"Under Market structure and conduct the Commission states its plans to focus closely on local market structure; it reports overall trends of decline in the number of grocery outlets (eight per cent of convenience stores and seven per cent of specialist grocery stores since 2000) yet a doubling since 2000 of stores operated by the big four supermarket chains, despite this the Commission has little to say about increased concentration of the market as Tesco and Sainsbury have moved into the convenience sector or the impact of the continuing loss of local independent stores.

"On their own analysis 2,400 independent convenience stores have disappeared since 2000.

"The commission's analysis of market structure also misses a vital point: they  consider the choice of large grocery outlets (above 1,400 square metres) within 10 or 15 minutes 'drivetime' of urban shoppers, but say nothing about considering those wanting to or having to shop on foot, bicycle or public transport. 

"Superstores do little to improve access for the elderly or disadvantaged or the carbon conscious. 

"Access to such stores is much worse for rural populations within 10 or 15 minutes 'drivetime' suggesting that rural areas would be poorly served by larger stores especially if these increased market share at the expense of local village retail as CPRE has reported (CPRE, The Real Choice, 2006). 

"There are useful findings on the planning system under Planning and land use. According to the Commission there is little to show that it is acting as a barrier to entry into the market or to hold back competition. 

It suggests that the 'sequential test' in planning – prioritising town centre locations for retail development – and the 'needs test' – assessing the requirement for additional retail floorspace – are not 'constraining the building of larger supermarkets'.

"This provides welcome support for retaining both tests to maintain a strong planning system which can bring together environmental, social and economic concerns in decisions that work for the whole community.

"In sum, there is scope for the Commission to do much more. 

"CPRE wants the Commission to bring forward proposals to support local businesses – farmers, suppliers and local stores alike – wrestling with the huge buying power, supply chains and distribution systems of the big supermarkets.

"Opening up sites for more superstores is definitely not the answer.

"It will do little to make shopping easier without a car, or to make fresh local food available at affordable prices or to stem the rapid decline of independent stores.

"And it will do nothing to keep our high streets and towns interesting, varied places to shop."