The sensational U-turn came as the Association of Convenience Stores (ACS) was putting the finishing touches to its legal challenge against the OFT through the Competition Appeal Tribunal (CAT).

A letter was sent to ACS solicitors last week saying that the OFT will formally withdraw its previous decision and look again at all the evidence submitted by trade bodies asking for a full market review or referral to the Competition Commission.

While it does not necessarily follow that a market review will take place, it is a clear admission by the OFT that its decision to rule one out in August was on shaky ground legally. ACS legal representative David Greene expressed astonishment at the development. He told C-Store: “This isn’t just unprecedented, it absolutely beggars belief. The OFT must have known they didn’t consider all the evidence when they made their decision, which is absolutely frightening.” As C-Store went to press, the ACS was due to meet its legal team prior to the CAT case conference, at which the OFT was expected to formally withdraw its case and agree to pay the ACS’ costs up to this point.

This leaves the Association with a choice over whether to press ahead immediately with a potentially costly legal action in the hope of forcing a market review, or to wait and see what the OFT decides once it has reconsidered the evidence. In either case, it is a humiliating climbdown for the much-criticised OFT. The Office declined to make any comment before this week’s case conference, but is clearly under pressure from MPs that have recently taken up the cause of local shops (see below). The ACS has long campaigned for a full review of the grocery industry in the light of multiple grocers’ entry into the c-store sector, arguing that the market is being distorted by the superstore companies’ below-cost selling on fuel and Easter eggs, and local pricing activity.

The OFT ruled in August that the market is “competitive” and that it acts in the interests of consumers, despite the large number of c-store acquisitions and openings by Tesco and Sainsbury.

ACS chief executive David Rae commented: “We are delighted that the OFT has decided to reconsider its previous decision. It is vital the OFT gives full and detailed consideration to the concerns raised. “There is a growing consensus within parliament, political parties and among consumers that something has to be done to promote a fair and sustainable grocery market for the future. We will provide all the assistance and information we can to the OFT to help them to tackle these vital issues.”

* Somerfield has amended its complaint against the Competition Commission, which said the retailer has to sell 12 stores. It will continue to use the CAT to challenge the ruling on which stores it must sell, and who it can sell them to.