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09/05/2006
Supermarkets to face competition probe
The Office of Fair Trading has announced plans for the Competition Commission (CC) to investigate the UK grocery market.
The UK's main supermarket groups have been accused of driving smaller local convenience stores out of business.
The OFT's decision follows a period of public consultation following a proposal to refer the grocery market to the CC in March. The OFT said that there were "a number of competition concerns" that warranted a full investigation by the CC.
The OFT said that the planning regime acted as a "costly barrier to entry", making it difficult for new stores to open and compete with those already in the market.
Large supermarkets also had significant land holdings, which the OFT said could aggravate barrier to entry or otherwise harm consumers. It also said that supermarkets had attached "restrictive covenants" in some instances, when selling sites.
The OFT also said that there was evidence that the big supermarkets' buyer power had increased and that some aspects of their pricing behaviour - such as below-cost selling and price flexing - could distort competition.
John Fingleton, Chief Executive of the OFT said: "This reference will allow the Competition Commission to examine in detail all aspects of the grocery sector, ensuring that consumers are able to benefit from strong competition through even lower prices, improved quality and choice, and continuing innovation in the market."
(KMcA)
The UK's main supermarket groups have been accused of driving smaller local convenience stores out of business.
The OFT's decision follows a period of public consultation following a proposal to refer the grocery market to the CC in March. The OFT said that there were "a number of competition concerns" that warranted a full investigation by the CC.
The OFT said that the planning regime acted as a "costly barrier to entry", making it difficult for new stores to open and compete with those already in the market.
Large supermarkets also had significant land holdings, which the OFT said could aggravate barrier to entry or otherwise harm consumers. It also said that supermarkets had attached "restrictive covenants" in some instances, when selling sites.
The OFT also said that there was evidence that the big supermarkets' buyer power had increased and that some aspects of their pricing behaviour - such as below-cost selling and price flexing - could distort competition.
John Fingleton, Chief Executive of the OFT said: "This reference will allow the Competition Commission to examine in detail all aspects of the grocery sector, ensuring that consumers are able to benefit from strong competition through even lower prices, improved quality and choice, and continuing innovation in the market."
(KMcA)
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