What's your response to the Competition Commission's announcement?Add your comments below
The Competition Commission's proposed remedies resulting from its 21-month grocery market inquiry have been met with disappointment by the convenience sector.
The recommendations, which can be challenged before the CC's final report in April, do little to limit the expansion of the retail giants and reflect the Inquiry team's views that there is no lack of competition in most local markets and that smaller shops are not unfairly disadvantaged.
ACS chief executive James Lowman called the proposed remedies “timid.” “There is a very real problem in this market and the measures recommended go nowhere near far enough,” he said.
Federation of Wholesale Distributors director general John Murphy condemned the CC for its failure to address pricing anomalies which see local shops paying up to 16% more for goods than the major supermarkets. “The sheer scale of this imbalance makes true competition on the high street impossible, and we had expected that the inquiry team would have got to grips with this in its remedies proposals,” he said.
And Clive Davenport of the Federation of Small Businesses said that the the Competition Commission had failed to be an effective regulator to the retail industry. “There are many more issues, such as below-cost selling and free parking for out-of-town shopping centres that the Competition Commission has failed to address properly,” he said. “There is a growing consensus of opinion across Europe that something must be done to protect independent retailers from the damaging effects of the unchecked expansion of supermarkets.”
ACS said it was cautious about the introduction of a competition test which would take into account existing fascias in an area when assessing planning applications. “We will remain cautious about this proposal until we are comfortable that the working of the test will actually achieve its ends without creating loopholes through which supermarket developers can impose their will against the wishes and needs of local people,” Lowman said. “We want to see very strong safeguards against the Office of Fair Trading being given greater weight in decision making than local people."
Murphy added that the planning measures outlined and recommendations to end the use of restrictive covenants on land use “only favour the big players in the grocery market and will reinforce the oligopoly situation that currently exists.”
The creation of a new Groceries Supply Code of Practice (GSCOP) which will include all grocery retailers with a UK turnover greater than £1 billion. This will enforce standards in the supply chain and prohibit retrospective changes in agreed terms of supply
Under GSCOP retailers must appoint an in-house Code compliance officer and improve their records of contact with suppliers
A groceries supply code ombudsman will arbitrate between retailers and suppliers. The post would have access to retailer's records dealings with suppliers
A ‘competition test’ should be introduced when local planning authorities are assessing planning applications for new grocery stores (and developments of existing stores) over 1,000 sq m. No controls on market entry in smaller formats. Applications by fascias new to an area will always be acceptable
Retailers must release restrictive covenants on land use in areas of high concentration and further covenants will be banned, but multiples will not be required to sell off land
Grocery retailers must lift existing exclusivity arrangements that have been in place for more than five years, and not to enter into any further arrangements of this kind
No recommendations for other changes to the planning system such as the ‘need’ test or ‘town centre first’ policy
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“The Competition Commission has yet again failed to address the plight of independent retailers. It appears to be blind to the fact that the convenience store sector is in decline, and to the very real problem of below-cost selling. The supermarkets are currently selling shell Easter eggs for cheaper than I can buy them. It’s impossible to compete with that.”
Tim Lake, Fareham
“It used to be said that Britain was a nation of small shopkeepers, but you only need to take a look down your local highstreet to see that this is definitely no-longer the case. I believe that incredibly uncertain times lie ahead, and because of that I will be acting cautiously this year. I certainly have no plans to make any large investments in the next 12 months.”
Dave Newman, Hastings
“The Competition Commission has once again failed to deal with the clear imbalance in the market. Its suggested list of remedies focuses on the competition between the multiples, and does nothing at all to help independent retailers. As a result, I fear deeply for the future of the local economy and small town centres.”
Nigel Dowdney, Swainsthorpe
“The Competition Commission has blatantly misunderstood the nature of the convenience-store market, and smaller independent retailers are going to suffer as a result.”
Peter Sitchel, Holmer Green, Bucks
“The entire exercise has been a massive waste of time and money. The Competition Commission has once again sat on its hands and let the independent community down. If the supermarkets can’t build their larger stores, they’ll just build smaller ones.”
William Brown, Barnstaple, Devon