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The Competition Commission (CC) is to extend its investigation into the grocery market by three months, in order to fully investigate the issue of local competition.
The extension, which will see the Inquiry publish its provisional findings in September, and its final report in February 2008, will enable the CC to gather data from grocery market suppliers, the majority of whom have yet to respond to its requests for submissions.
The delay was welcomed by the Association of Convenience Stores, which described the inquiry as “A once in a generation opportunity to achieve fairness in the grocery market which is too important to rush the conclusions."
The Commission also suggested that it would not be swayed by Tesco's attempt to suggest that "local" should be defined as within a 30-minute drive from a store. "Competition is local as there is evidence that the number of rivals located close to a store affects its performance," the Commission said, adding that its research indicated that the effect of the local competitive conditions tends to decline with drive-time from the store.
ACS Chief Executive James Lowman welcomed the decision. “We wholly reject the simplistic approach to defining consumers as one homogenous group all with access to all shops in a 30 minute drive time that has been put forward to the Inquiry; such an approach is irrelevant to the 27% of households that do not have access to a car. We are confident that this will not be the ultimate conclusion of the Commission.”
However, Lowman urged caution over the use of the SSNIP analysis tool which was the basis of Tesco's submission and which the Commission plans to adopt. "Our concern is that any analysis is only as good as the data upon which it is based. Collecting that data in the right way is the main challenge that the Commission faces at this stage," he said.
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