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News - 11 May 2006
Its about more than just groceries!

UK grocery market under the microscope

The Competition Commission is to launch a full-scale inquiry into the UK grocery market. This is a move that the SME grocery sector has been calling for through its representative body the Federation of Small Businesses (FSB).

The OFT has asked the Competition Commission to look in particular at the supermarket's land banks, the impact the planning system has on competition in the sector, the treatment of suppliers and the use of below-cost pricing (where an item is sold at below the production cost in order to entice shoppers to the supermarket to do all their shopping there).

Clive Davenport, FSB National Trade and Industry Chairman, said, "We welcome the move by the OFT to look further into the grocery sector. However, we are disappointed that the remit of the inquiry will not cover other vital issues such as car park costs for high street stores versus free parking for supermarkets and the toothless operation of the Supermarket Code of Practice.

"Below-cost selling and pressure on suppliers are important matters to be covered by the inquiry and both hit small firms hard. All around the country we can see the evidence of this in the number of empty high street stores.

"The fact that over 1,200 responses were received by the OFT shows the strength of feeling on this issue. Large and small retailers and their suppliers can co-exist in future to the benefit of consumers and we will be making a full submission to the Competition Commission to help achieve this."

The OFT report highlighted the fact that the current planning regime makes it very difficult for new players to enter the market and compete with those already trading. It also criticises some aspects of buying and pricing that distort competition.

David Lepper, Labour and Co-operative MP for Brighton Pavilion, commented, “I am concerned at the increasing threat to independent shops by the big supermarkets extending the range of products they offer and moving into locations where they had previously not been represented.”

David is speaking at a conference on combating Ghost Town Britain and the need for local sustainability and community involvement at a meeting in the Brighton Centre on Thursday 18 May (see related story in Knowledgebase).

Read related items on:
Retail, pubs, clubs and restaurants
Competition Commission
Office of Fair Trading

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