Grocery market inquiry

23 January 2007

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The FPB believes the Competition Commission's inquiry into the grocery market will be hindered unless anonymity can be guaranteed for those submitting evidence to it

The Forum of Private Business (FPB) believes the Competition Commission's (CC's) inquiry into the grocery market will be hindered unless anonymity can be guaranteed for those submitting evidence to it.

The inquiry's ‘Emerging Thinking' report has not yet reached any conclusions on the use of anti-competitive practices by the supermarkets, but so far has suffered from a poor response from some suppliers asked to put forward evidence. Peter Freeman, Chairman of the CC and inquiry said:

"We have considered the evidence supplied concerning relationships between grocery retailers and their suppliers. Whilst these haven't indicated widespread problems in the supply chain, there are still concerns." He continued, "We have some concerns about farmers and we have not received as much specific evidence about unfair treatment of suppliers as we might have expected."

The FPB's Campaign Manager, Victoria Carson, believes that is because there has been no clear message guaranteeing anonymity for those suppliers, who fear a reaction from the supermarkets.

"Mr Freeman has said today that "requests for confidentiality will be taken on board", but this is by no means a guarantee. An effective inquiry must ensure that sensitive information is dealt with in a way that will not impact on the businesses supplying it."

Mr Freeman also stated that: "We have found that bigger buyers do not always appear to get better terms from suppliers."

Miss Carson said that: "It appears the Competition Commission has missed the bullying evident in the supply chain. Large retailers are abusing suppliers by changing terms of payment mid-contract, in the knowledge that their suppliers cannot afford to say no."

The report has stated that the CC is still looking at the ‘waterbed effect' – supermarkets driving down the prices of their suppliers through their buying power, which forces suppliers to raise prices for other smaller retailers – and the focus will now shift towards the competition between retailers at local level.

That has been welcomed by the FPB. Miss Carson believes that independent retailers are facing a difficult future unless something is done.

"The underhand tactics of the big boys are destroying competition in retail as a whole. Small shops are closing, high streets and local economies are suffering. The grocery market inquiry must be the first investigation of a wider campaign to create an even playing field for all."

The report has concentrated on finding out the facts about supermarkets' land holdings, their purpose and how the planning systems affect retailer development. It has found that Tesco holds most land, but other retailers are actively increasing their holdings.

Miss Carson, said that more than 300 landbank sites existed in the UK and that they prevented other companies competing in local markets.

"Retail giants are using their financial muscle to prevent rivals gaining access to markets. At the same time, businesses around the landbanks are suffering as a result of a lack of investment and maintenance of those areas because the supermarkets often wait significant periods of time before developing them."

Miss Carson wants the landbanks to be closely monitored.

"There must be limits set on how much land is held by retailers and for how long. It is up to the supermarkets to prove that their plans are beneficial to the areas they are locating in, as well as their own bank balance."

She stressed that, in future, planning committees in local authorities must understand the consequences of major retail developments and be empowered to dismiss plans that are not in the consumers' interests.

"We are seeing the impact that supermarkets are having on town centre retail. Planning committees must wake up to the fact that the job creation and investment supermarkets bring is offset by job losses and loss of business elsewhere. That leads to a lack of choice and quality of service, and it is the consumer that pays the price. More authority must be given to local planning committees to turn down planning permission on the basis that it is anti-competitive."

Miss Carson also stressed that planning committees must be resolute and watch for other tactics from the major retailers.

"It is no good being able to refuse planning permission for another massive supermarket on anti-competitive grounds, only for the retailer to apply to develop the land for, say, housing, and still keep competition at bay."

Contact:

Tell us what you think about this issue. Email us at feedback@fpb.org

For further information, contact Matt Hardman at the FPB press office on 01565 626019 / 07775 756 306 or via email at matt.hardman@fpb.org

Grocery market inquiry

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