Key points from the Competition Commission report

The Competition Commission’s provisional findings on the grocery market has been released.

Some key points are:

  1. The Competition Commission Report has made a provisional finding of adverse effects on competition in the grocery retail sector. The report is provisional and further submissions are being sought.
  2. The Report notes that ‘a significant number of local markets have high levels of concentration’, that this restricts competition and is bad for the consumer.
  3. The Report notes that retailers prevent competition by blocking access to land for further development by competitor retailers (this relates to large and mid-size stores). This is what the Commission has provisionally found that Tesco have done in one specific case they are dealing with, in Slough.
  4. The Report notes that competition is blocked or distorted by the power that some retailers have in their relationship with their suppliers.
  5. The Competition Commission is considering recommending changes to the planning system that would see the inclusion of a ‘competition test’ at some point in the planning process. It is considering whether retailers would only be permitted to submit a planning application for a grocery retail store if the planned store would not result in its acquiring more than a certain percentage of the market in a given local area. Obviously, as residents of a very small city where there are already 13 Tesco-owned stores, and where Tesco have a 51% share of the market, we would strongly welcome that.
  6. The Commission says in its report that their investigation has been hampered by the reluctance of ‘some parties’ to give the evidence that the investigation needed. The Commission says that there was insufficient evidence to reach conclusions on number of the areas of greatest public concern, such as worries about predatory pricing by the big retailers. Obviously this means that the jury is still out on some of the most important questions regarding competition on the high street. Since this is a provisional report, we will be interested to see if the Commission manages to persuade the retailers to be more forthcoming on these matters for the final report.
  7. The Report says that ‘if Tesco continued to draw ahead of its competitors and accumulate positions of local market power that threatened consumer choice and the value and quality of the retail offer, then harm to consumers would be likely to follow. We have no doubt that the OFT, and many other interested observers, will follow developments in grocery retailing with these concerns in mind.’ We think that this has already happened in Cambridge, which is why the leader of the City Council has referred Tesco’s plan to open a store on Mill Road to the Competition Commission.
  8. The Report notes that nearly a third of Britain’s independent convenience stores have been lost in the last seven years. It also notes that Tesco expect to increase their Express stores by 100, or more than 10 per cent in the current financial year. We don’t think that these two facts are unconnected.

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