Archived press release

Supermarket Giants Taking Over the High Street

30 October 2004

Unchallenged supermarket takeovers are putting consumer choice at risk, Friends of the Earth warned today, following the Office of Fair Trading's decision to wave through Sainsbury's takeover of 114 Jacksons stores without any investigation of the impacts on suppliers, consumers or independent stores. The environmental campaign group said that this latest takeover of high street convenience stores reflected a piecemeal takeover of the high street which could eradicate consumer choice.

Friends of the Earth believes competition authorities are making a mistake in dealing with these takeovers on a case by case basis and ignoring the overall impacts of this on-going trend.

Recent takeovers include:

• November 2002: Tesco takeover of T&S
• January 2004: Tesco takeover of Adminstore
• February 2004: Sainsbury takeover of Bells
• October 2004: Sainsbury acquisition of Jackson's

This recent wave of acquisitions of convenience store groups by supermarkets raises concerns about whether there will be a viable independent convenience store sector in the long term, raising serious issues for consumer choice.

The environmental group wants the Competition Commission to carry out an investigation into the impacts of the takeovers, to include the increased buyer power gained by the supermarkets as they add to their market share bit by bit via these takeovers.

Suppliers to the major supermarkets, including farmers, already suffer from the huge imbalance in power. Tesco and Sainsbury together control some 45% of the grocery market. The Competition Commission has acknowledged that supermarkets with considerable buyer power (defined as over eight per cent) are abusing their position. The Supermarket Code of Practice was intended to stop this, but has proved ineffective. Friends of the Earth is part of an alliance of 15 organisations calling for the Code to be strengthened and put on a statutory footing.

Friends of the Earth supermarkets campaigner Sandra Bell said:

"The competition authorities are making a big mistake by waving through a series of takeovers of convenience chains by big supermarkets. They are allowing Tesco and Sainsbury's to continually add to their power in the market and reduce choice in the high street without any investigation of the impacts on consumers or suppliers. These supermarkets are already using their market power to bully suppliers and drive out competition. Further takeovers should be halted until a full investigation of the impacts of convenience store takeovers is carried out, and a strict statutory Code of Practice is introduced to ensure fairer trading practices with supermarket suppliers".

Notes

Alliance calls for new supermarket code and watchdog (PDF format)

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Published by Friends of the Earth Trust