The National Federation of Retail Newsagents (NFRN) acknowledges the provisional findings of the Competition Commission investigation of the grocery market but admits to being extremely surprised at the limited scope and absence of criticism on effects of the situation that exists for smaller retailers.

The NFRN says it has long recognised that the major supermarket chains are distorting competition in local markets. The NFRN agrees that supermarket economies of scale act as a barrier to entry and expansion by smaller retailers and new entrants.

It says: “Supermarkets own a significant number of land bank sites, many of which are adjacent to stores with few competitors. Control of further sites through third party leases together with restrictive covenants and exclusivity arrangements all have the affect of stifling competition in those local markets. The Competition Commission should seriously consider changes to the planning system in relation to edge of town positions that would provide a better chance for smaller retailers to survive and prosper. Constraints on out of town developments should continue. A `competition test` should be considered that would allow the existing local position of smaller convenience retailers to be taken into account during planning decisions.”

The NFRN is concerned over the ability of supermarkets to transfer excessive risks and unexpected costs to suppliers through various purchasing practices like, for example, retrospective changes to supplier agreements. This has the effect of damaging investment and innovation in the supply chain with a waterbed effect that is detrimental to smaller, independent convenience retailers. The Competition Commission needs to tighten various provisions in the Supermarket Code of Practice and ensure that both retailers and suppliers are able to cite complaints without fear of persecution.

National President, Colin Finch said: “As independent retailers, NFRN members are an integral part of the communities they serve and so have experienced first hand the range of problems that supermarkets create locally. The disadvantages to consumers are finally out in the open and the NFRN welcomes the Competition Commission’s decision to now consider a range of measures to address these concerns.

“However, we don’t believe that the Competition Commission is going far enough and we are very surprised at the suggestion that there is insufficient evidence to suggest that convenience and specialist store numbers are not in such a state of decline to suggest that a waterbed effect exists or that it distorts competition between large and small retailers. Implementation of an Ombudsman with `teeth` would go some way to effectively enforcing and monitoring a revised Code,” he added.

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