Archived press release

Competition Commission fails to act on supermarket bullies

31 October 2007

Today's Competition Commission report has failed to offer any real solutions to the growing problem of the dominance of the big four supermarkets, says Friends of the Earth.

The report provides extensive evidence of how supermarkets' excessive power allows them to dictate to suppliers and consumers, distorting competition and harming choice.But despite this, the Competition Commission recommends changing planning laws to make it easier for supermarkets to expand. Friends of the Earth's research shows a clear need for better and stronger planning laws.

The Competition Commission's report focuses on competition and choice between the big four supermarkets locally, rather than looking at the broader picture and the ever decreasing choice and diversity offered by smaller shops.

The Competition Commission's report states that supermarkets "transfer excessive risk and excessive costs to their suppliers" but again fails to offer robust remedies. Supermarkets are currently governed by the Retailer Code of Practice and the Competition Commission acknowledges that it has not been effective but they need recommend significant changes. Friends of the Earth has been campaigning for changes to the Code and an independent supermarket regulator to oversee for over four years.

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

"Today's report is a totally inadequate response to the growing power of the big four supermarkets. The Competition Commission acknowledges that supermarkets bully their suppliers and reduce consumer choice, but then bizarrely recommends making it easier for them to expand. Unless urgent action is taken to curb the dominance of the big supermarkets Britain looks set to become an out of town chain store nation."

The two year long probe into the grocery market is a direct result of a campaign led by Friends of the Earth. In November 2004 they submitted a Proposal for a Market Study to the Office of Fair Trading which forced the OFT to carry out an initial investigation into the market and subsequently refer it to the Competition Commission for a full inquiry. The investigation has generated an unprecedented level of public interest, with over 35,000 people writing to the Competition Commission to express their concern about supermarkets.

Unregulated supermarket dominance has a hugely detrimental impact on the environmental. Recent Friends of the Earth research highlighted how dairy farmers are struggling to break even and are unable to invest in greener farming, despite increased consumer demand for more environmentally friendly produce. This coincided with the OFT allegations of dairy price fixing demonstrating just how supermarkets profit while customers, producers and the environment suffer.

Friends of the Earth is calling for:

• A strengthened Retailer Code of Practice and appointing an independent supermarket regulator to oversee its effective working.
• The Competition Commission to prevent supermarket expansion from becoming even easier, as proposed in the Government's Planning White Paper.
• A strengthened planning system with new tests for diversity and environmental impacts.

Farmers speak out over the impact of low milk prices (PDF† )

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Published by Friends of the Earth Trust