Business | Economy
UK supermarkets face competition shakeout
Commission expected to detail long-awaited remedies this week to ensure fair play in £125b grocery sector
- Reuters
- Published: 23:55 February 11, 2008
London: Britain's Competition Commission will detail long-awaited remedies this week as part of a two-year investigation to ensure better competition in the UK's £125 billion ($245 billion) grocery sector.
The decision is being closely watched by the largest supermarket groups Tesco, Asda, J. Sainsbury and WM Morrison Supermarkets that stand to be most affected by any changes to the system.
The Competition Commission, which has wide-ranging powers, short of issuing fines and changing the law, has said it could consider introducing an ombudsman to adjudicate on issues arising between grocers and suppliers, and may advise changes to planning laws.
"We are planning to put out remedies mid-week, and the papers will provide greater detail on the measures we outlined at the provisional findings stage," Competition Commission spokesman Rory Taylor said. In the provisional findings published on October 31, the Commission found that there were features of the grocery market that prevented, restricted or distorted competition.
Its remedies will address its findings that a significant number of local markets have high levels of concentration, and the fact that planning regimes have acted as a barrier to entry or expansion in a significant number of local markets.
Tesco, Britain's largest retailer, with a share of more than a third of the grocery market, has been forced to defend its competitiveness throughout the inquiry in the face of rivals' accusations.
One example is Asda, part of Wal-Mart Stores Inc., which has been lobbying for planning rules to be suspended in towns where Tesco's presence is particularly strong so that it may build out-of-town shopping centres, documents posted on the Commission's website showed.
The Commission has said it is looking at changes to the planning system to facilitate greater availability of land for development outside town centres. It may also recommend including a competition test in the planning system so that local authorities may rule against further development by a retailer that already has a strong local presence.
The inquiry, the third in seven years into Britain's grocery sector, is expected to conclude at the end of April.
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