Competition must be improved in the UK grocery sector and suppliers need to be better protected, the UK’s Competition Commission said today (31 October).
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The commission this morning issued the preliminary findings of an 18-month report into the UK grocery sector, in which the “big four” supermarkets account for over 60% of sales.
The study that, in most areas of the market, supermarkets are delivering a “good deal for consumers” but said there is a lack of competition in certain markets.
The commission has recommended changing UK planning laws or forcing retailers to sell off land that they own to encourage greater competition in certain parts of the country. It has also proposed changing the code of practice for the treatment of suppliers.
It has also expressed concern that retailers can pass on costs to consumers through practices including retrospective changes to contracts.
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By GlobalData“Our focus throughout this inquiry has been whether consumers are receiving the benefits of vigorous competition, such as value, choice, innovation and convenience—and on most counts the groceries market delivers just that,” said the commission’s chairman, Peter Freeman. “However, we feel that consumers could be even better served.”
“In a number of local areas more competition would benefit consumers both locally and more generally.”
Freeman added: “We are concerned that retailers could be using existing land holdings and restrictive covenants to frustrate potential competition. Further, while we understand that the planning system has to balance conflicting demands, not all of which favour development, it can act as a barrier to new competing stores.”
The commission’s findings are not final and supermarkets have the opportunity to respond. The final recommendations will be published in May.
The British Retail Consortium said there should be a “lengthy moratorium” on investigations into the UK supermarket sector. Retailers have faced three investigations into the sector in the last seven years.
“I hope this will be the last such enquiry for a long time,” said Kevin Hawkins, director-general of the BRC. “This report clearly demonstrates there is no systematic unfairness in the way supermarkets treat small retailers or suppliers and, above all, demonstrates our highly competitive grocery market has produced value, choice and convenience for customers.”
