Archived press release

Action needed to curb supermarket power

23 January 2007

Today's acknowledgement by the Competition Commission that the trading practices of the biggest supermarkets may be leading to the loss of farmers and small shops, has been welcomed by Friends of the Earth.

Although the Commission's `Emerging Thinking' document is inconclusive in many areas it has not ruled out action to protect suppliers and has also hinted that market leader Tesco is becoming too dominant.

Friends of the Earth's Supermarket campaigner, Sandra Bell said:

"This report confirms what farmers and small shops already know: Supermarket dominance is a threat to their livelihoods. The next stage of this inquiry is crucial. Tough action is urgently needed to control the power of the supermarkets. Failure to do so will lead to an increase in food miles and force farmers to either intensify or leave the land."

"The future of our town centres and high streets hang in the balance. The Competition Commission recognises the threat they face. It must now ensure that action is taken to strengthen planning policy and curb Tesco's dominance."

1. On suppliers

The Commission reports that bad practices addressed by the Supermarket Code of Practice are "widespread" and specifically raises concerns about the loss of dairy farmers noting that the increase in retail price of milk has not been passed on to farmers. The Commission acknowledges concerns that impacts on farmers may reduce choice to consumers and have environmental impacts such as increasing food miles. But Friends of the Earth is concerned that despite the weight of evidence the Commission is still insisting that more farmers come forward with specific cases against the supermarkets before it will act.

2. On planning policy

Significantly the Commission does not back the recommendations of the Barker Review of Planning which has threatened to dismantle the town centre first approach. Instead the Commission says that the `needs test' "does not represent a constraint on the construction of larger supermarkets" noting that a significant number of large stores have been built over the last six years.

The Commission acknowledges that supermarkets may be using certain tactics in the planning system to gain advantage over rivals but does not accept that this is widespread. Friends of the Earth believes that the use of these tactics is common.

3. On small shops

The Commission acknowledges that below cost selling by the big supermarkets may be pushing small shops out of business and that this may be reducing consumer choice. But despite receiving evidence from independent retailers and wholesalers the Commission does not consider that there is a threat to the wholesale sector that would have a significant impact on the future of independent stores.

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Published by Friends of the Earth Trust