The Office of Fair Trading (OFT) is expected to confirm within weeks its draft opinion that a full market review is justified, following a surprise initial ruling earlier this month.
Interested parties are currently preparing their responses to the draft ruling, including recommendations as to the scope of the inquiry. While a wide-ranging inquiry covering subjects such as fuel will give more grounds to criticise and possibly curtail the activities of the supermarkets, it will also prolong the process to possibly as long as two years and make it more expensive for campaigners to press for any change in the grocery sector.
But the decision is a triumph for the Association of Convenience Stores (ACS), which demanded a referral last year and mounted a successful legal challenge to the OFT when it subsequently ruled that it had no concerns about the market. Last month the ACS launched a fighting fund to help pay for the legal bills and consultants’ costs involved in a lengthy inquiry.
ACS public affairs manager James Lowman said: “This is what we wanted. We always knew it was not an open and shut case and that there was reasonable suspicion that the market was not operating properly due to the buying power and predatory pricing of the supermarkets.
“The previous inquiry (in 2000) was arguably too limited - this time around there will be huge demands on all sorts of retailers to come up with the detailed information that the Competition Commission requires. There will be no quick wins, no magic bullets.”
Of particular concern to the OFT is whether the current planning system creates barriers to entry, particularly for independent supermarket operators, as the big supermarket chains “use their land holdings to re-inforce their market position”.
It also recognises that increased buying price differentials between the major supermarkets and wholesalers “undermine the viability” of distributors to independent c-stores, and that below-cost selling, price-flexing and the entry of supermarkets into the c-store sector has the potential to distort competition.
C-Store’s survey of independent retailers showed they welcome the fact that the activities of the major supermarkets will be under review, although many feel that it is now too late to stop them building an ever-increasing share.
Christine Garman of Hilton Post Office in Inverness said: “I hope something will come of the investigation but it’ll probably be too little, too late.”
Have you suffered from unfair competition at the hands of multiple supermarkets? Contact Convenience Store on 01293 610218 and we’ll make your voice heard to the authorities.
Mark Bamforth,Lytham St Annes Post Office, Lancashire:
“Tesco has too much power and I can’t understand how it has opened up so many stores in our area. I’m pleased the issue’s being referred - it’s long overdue. Maybe small retailers will then get a fair crack of the whip.”
Dave Chew,Dave’s Convenience Store, Cheshunt, Hertfordshire:
“Big retailers pressurise suppliers to give them cheap promotions and then suppliers claw money back from people like us, which means there’s a greater price differential while our margins are low. I don’t think an investigation will make any difference as the supermarkets are just too big, and by opening up small stores they’ve really put the final nail in the coffin.”
Christine Garman,Hilton Post Office, Inverness: “The supermarket chains are selling more non-food, which is having an impact on all sorts of small stores. The Express stores are a disgusting development - they’re really pushing out the independents. I hope something will come of the investigation but it’ll probably be too little, too late.”
Paul Sheppard, Smile Local, Bath:
“Supermarkets have too much power but it’s difficult because consumers will go wherever the cheaper prices are and there’s no way we can compete with them - anything we can do they can do better. I haven’t got any competition where I am but I know that if a Tesco Express opened up, our customers would start shopping there.”