Following an 18-month inquiry, the Competition Commission announced a raft of measures to increase competition in the market, but insisted that, although it is often difficult for them to compete with large supermarkets such as Asda and Tesco, the future of small retailers is not under threat.

However, following extensive consultations with the FPB and other organisations, the Conservative Party's Parliamentary Enterprise Group recently published the initial findings of its Commission into Small Shops in the High Street. It reiterated a warning, originally made in 2006 by the All-party Small Shops Group, that the majority of the UK's independent retailers could disappear by 2015, should the present rate of 2,000 closing every year be allowed to continue.

"Evidence that the number of independent shops in our villages, towns and cities has declined in recent years is there for everyone to see. Any report that states otherwise is ignoring a widespread and worrying trend," said the FPB's Chief Executive, Phil Orford. "Small businesses, especially those in the retail sector, continue to suffer as a result of the dominance of supermarkets and other large chains. While we welcome some of the Competition Commission's initiatives, we do not believe the recommendations go far enough in developing policies that will help reinvigorate our high streets and the communities they serve."

The group pointed out that the Competition Commission's own evidence showed that, since 2000, sales in supermarkets have grown by 26%, and by 19% in large convenience stores, but that specialist stores have experienced only a 1% growth in sales. The FPB is concerned that, unable to compete with their larger rivals, more and more small shops will be forced to close.

The investigation into the groceries market has called into question some of the business practices of supermarkets, such as below-cost pricing, where large retailers significantly undercut market prices on the high street by selling certain products at a loss in order to soak up trade, making up these losses on other product lines.

In its preliminary findings, the Competition Commission said that, between 1999 and 2006, the entry of a supermarket into a town centre had caused more existing independent grocers and local markets to seek alternative locations, than it had encouraged new retailers to move in.

A study published in April 2008's International Journal of Health Geographics, which was carried out by the University of Western Ontario, compared the locations of supermarkets in the Canadian city of London, Ontario, between 1961 and 2005. It found that smaller food shops were being forced out of older neighbourhoods because the large supermarkets being built in increasing numbers in the suburbs had soaked up most of the trade.

The study identified ‘food deserts' as residential areas in which accessing quality, reasonably-priced food stores by foot and public transport was deemed to be most difficult. It found that people living in these areas pay almost twice as much for goods from convenience stores than those living elsewhere, and are more likely to suffer from bad health and a low quality of life. The FPB is concerned that these ‘food deserts' could spread to the UK unless smaller, independent grocery storesies are better protected.

The FPB is calling for better payment practices and fairer contractual arrangements, as well as the removal of other unfair fees, such as charging suppliers ‘loyalty payments' in exchange for shelf space. In addition, changes to legislation and the UK's tax regime are required to support smaller retailers. VAT-avoidance by supermarkets on items such as hot takeaway foods and goods imported via the Channel Islands, exploiting a VAT loophole, should also be prevented.

The FPB is further concerned that, by encouraging a greater variety of supermarkets to move into areas in order to keep prices low for consumers, the Commission's proposed ‘competition test', which would be considered by planning authorities when considering applications for new stores, will not protect smaller retailers.

In a poll carried out in Referendum, the FPB's quarterly survey of members, 76% of respondents called for a watchdog to oversee the groceries sector. The creation of an ombudsman to oversee a revamped supermarket code of conduct, a measure suggested by the Competition Commission, could provide smaller suppliers with some protection.

However, the FPB believes that a clearer picture of the supermarket chains' dubious business practices could have been painted had their suppliers, many of whom were reluctant to give evidence out of fears that their businesses would suffer as a result, been granted a guarantee of anonymity during the investigation.

Another survey of the FPB's members found that 74% of respondents agreed that business-owners should be guaranteed anonymity when giving evidence to both the Competition Commission and the Office of Fair Trading (OFT).

"We have all experienced problems because of the supermarkets, especially since they started moving into areas they never have before," said FPB member Arthur Hardy, of Special Thoughts card and gift shop in Llangollen, Wales. "We have every right to complain when they overstep the mark. The Competition Commission is just nodding in our direction, and giving the big supermarkets what they want. It's worrying to see what's going on."