A new study by the Association of Convenience Stores (ACS) has revealed what it describes as "the single most compelling proof" that the supermarkets are distorting competition in the UK grocery market by obtaining cheaper prices from suppliers than wholesalers and independent stores.
The study, which compared over 300 products sold in both large and small stores, found that 10% of the items sold by supermarkets are available to the consumer at a lower price than that paid by a wholesaler.
It also reveals that, based on an estimation of likely margins, the selling price of 74% of items in supermarkets suggests they were purchased at prices below those available to the independent sector.
The findings challenge the Competition Commission's (CC) view, stated in its Emerging Thinking, that no differential exists between supermarket buying and the rest of the market. The ACS has urged the CC to consider the new evidence in its ongoing inquiry into the grocery market.
ACS chief executive James Lowman said: "This study shows that in 10% of cases a small shop cannot buy products from their wholesaler cheaper than they could off the shelf in a supermarket. This is the single most compelling proof that there is a severe competition problem in the market and shows how important it is that the Competition Commission goes further in its probe of super-markets and their suppliers."
The study compared the buying prices of three wholesalers supplying the independent sector with the supermarket selling prices from the online shopping sites of Tesco, Sainsbury's and Asda. Of the 317 items surveyed, there were 32 instances where the average wholesale price was higher than the average supermarket retail price.

Online opinions

We asked: Does the buying power of the multiples unfairly restrict competition in the grocery market?

Ash: "The wholesalers must be totally blind if they were not aware of this pricing differential. They should be lobbying, along with their MPs, to force the issue."

Sarabjeet Sidhu:
"I know a manufacturer who supplies Tesco with pies at 40p each yet they sell to independents at 70p each. Similarly a supplier was fined £70,000 for making a delivery to them three days late. These comments have been made to me by the reps and sales staff of these companies."