However, it says it has uncovered little evidence so far of widespread anti-competitive behaviour or threats to the independent supply chain.
Freeman said: “Our principal concern now is to focus on competition between retailers at the local level, where it most matters to consumers, as this is where many of the potential concerns we have would be evident.
“We need to see what choices shoppers have in particular areas and how competition works between retailers of different sizes. We know about the extent of retailers’ land holdings, but it’s how these are used locally, and the related effect of the planning system, that matters.
“It would be a cause for concern if supermarkets, either individually or collectively, were in a position to increase prices or lower their offer in any particular locality or region because of lack of effective competition.
“We are not here to punish success or individual retailers but we are concerned with whether Tesco, or any other supermarket, can get into such a strong position, either nationally or locally, that no other retailer can compete effectively.”
Although the document is still open to discussion and challenge by campaigners, the panel maintained that so far they had found little cause for concern in the independent supply chain and that, with the specific exceptions of the dairy and pig meat sectors, food and drink manufacturers and wholesalers seem to be “in reasonable shape”.
ACS chief executive James Lowman stated that the concerns outlined by the CC “took us one step closer to a fairer grocery market”.
He said: “Overall, we are encouraged by this statement. However, what is clear is that in some areas the Commission still needs to go out and find crucial information.
“For example, their analysis of the relationship between retailers and their suppliers has not gone far enough. They must probe this issue much further in order to fully understand how buying power operates and how it ultimately damages competition and the consumer.
“We agree with the Commission that consumer choice at a local level is essential. But real choice relies on a variety of local outlets, not just promoting competition between the large superstores.
“The Commission should not fall into the trap of believing that building more superstores will increase choice. In fact the result would be quite the opposite - building more superstores would undermine true competition and reduce choice and diversity, especially in rural areas and market towns.
“We also strongly believe that practices such as below cost selling and price flexing are targeted in a predatory manner and have the effect of closing smaller competitors.
“We will be helping the Commission to consider this issue in far more detail, and we believe that the Commission will conclude that these practices that remove competition from the market place are harmful to consumer choice.”
At the same time, the CC released a supplier survey revealing that if there is a supply shortage, 48% of suppliers said they would supply a larger customer even if it meant they couldn’t then supply smaller customers. This figure rises to 60% for suppliers with grocery turnover of more than £50m.
Similarly, if a larger customer increased demand, 40% of suppliers said they couldn’t then supply small customers, and if a larger customer demands improved or additional services, 21% of suppliers say that service to smaller customers gets worse.
And there was some evidence of the so-called ‘waterbed effect’, with 7% of suppliers saying they would raise prices to smaller customers If a larger customer negotiates a better deal,
Commenting on the survey, Lowman added: “It shows that there are grossly unfair practices taking place, especially when there is a shortage of products, and these need forensic examination by the Competition Commission. How can our members be expected to compete when they aren’t being supplied the products they need, yet the superstores retain supply?”
Federation of Wholesale Distributors (FWD) director general John Murphy also gave a guarded welcome to the Commission’s document.
“We are not convinced that the CC has demanded the same quantity and quality of data on pricing from the supplier community that they have received from retailers and wholesalers,” he said.
“We urged the Commission to delve deeply into all the major suppliers’ price records, especially for larger quantities, so that it would be able to see the true state of affairs regarding the supermarkets’ buyer power once and for all.
“Its initial finding is based on price data from just 15 suppliers of major branded goods on an unspecified number of lines. But the CC is already pointing out that this is in contrast to the findings of the 2000 investigation where the then five largest supermarket groups were found to purchase goods from suppliers at significantly lower prices. (Based on the top five branded lines of 26 large suppliers).
“We believe it is highly unlikely that the current big four supermarkets would have ceded that advantage, especially as they have grown their overall market share so dramatically in the last five years. It also flies in the face of wholesalers’ widespread anecdotal experience that large differentials exist.
“Although the Commission says it will seek to review additional data for other suppliers, FWD will push to ensure they do a comprehensive job.
Welcoming the report, SGF Chief Executive John Drummond said: “I am encouraged by some of the findings contained within the interim report. The Commission have found some evidence of predatory pricing which is forcing small retailers to close. They have identified the practice of below cost selling of alcohol which aims to drive out competition from convenience stores.
“The Commissioners have indicated that the next stages of the inquiry willl focus on behaviour by supermarkets at the local level. They need only look at recent developments in Huntly, Castle Douglas and Dunbar to find anti-competitive behaviour which puts small retailers out of business.
“SGF will also be encouraging the inquiry to give greater consideration to the 25% of Scottish households who do not have access to a car. The current measurements used to identify healthy competition are based on drive times to supermarkets and ignore town centres with little or no parking provision and discount the needs of those relient on public transport.”
“The Competition Commission inquiry is the last opportunity to stem the tide of supermarket excess which is devastating Scotland’s high streets with their below cost selling, abuse of the planning system and anti-competitive land banking.
“Consumers are recognising that there is a price to pay for having a megastore and that price is an empty town centre.
“SGF is calling on the members of the Commission to support our proposals for price transparency. Supermarkets and suppliers should be made to publish the best available price for products to expose the below cost selling which is driving community stores out of business and leads to beer and cider costing less than water.
“The Competition Commission must act in the interest of all retailers and all communities and must not be distracted by bickering between the big boys.”