Archived press release

Supermarkets referred to Competition Commission

9 May 2006

The Office of Fair Trading's (OFT) decision to refer the Grocery Market to the Competition Commission for a new market investigation is welcome, but is misguided in its focus on low prices, Friends of the Earth said today. The environmental campaign group, which had called for the referral [1], said that a free-for-all in the market place, with increased deregulation in planning, would not benefit the consumer or society in the long run.

The OFT has acknowledged that the increasing dominance and buyer power of the big supermarkets needs to be addressed. Friends of the Earth called on the Competition Commission to conduct a speedy but thorough investigation.to find tough remedies that will help small shops to flourish and protect farmers from bully behaviour.

Friends of the Earth's Supermarkets Campaigner Sandra Bell said:

"Time is ticking for our high streets and farmers. The Competition Commission must start its investigation without delay. Radical solutions are needed to deal with these problems. The power of supermarkets needs to be challenged. The Commission should consider selling off stores and land if it is to create a level playing field in the retail market. And suppliers must finally be given genuine protection against the bullying tactics of the supermarkets".

The environmental group said it was alarmed by the OFT's suggestion that the planning system needs to be weakened to allow more out-of-town supermarkets to be built. Such a move would reverse 10 years of Government policy aimed at revitalizing town centres and reducing car based travel.

Sandra Bell continued:

"Any weakening of the planning system to allow more out-of-town stores to be built would be the final nail in the coffin for many high streets and town centres and would increase the environmental damage through increased transport emissions. It would also be a huge blow to the many communities around the country who are trying to protect the character of their towns by resisting more supermarket developments"

Such a move would allow more big supermarkets to be built at the expense of smaller retailers in the town centre. It would increase traffic related emissions and exacerbate problems of food poverty because shoppers without cars would lose more of their local shops, the environmental group said.

Friends of the Earth's analysis of planning cases [2] shows that supermarkets already use their powerful position to obtain planning permission, even in the face of strong opposition.

Friends of the Earth said it was also disturbed that the OFT had dismissed the suggestion that access to healthy food should be an important consideration when assessing whether all consumers are benefiting from the market. Instead it seems to suggest that 'quality' food can be made available as a niche market, but cheap food should be the norm. But Friends of the Earth warned that the relentless drive to low prices would eliminate quality suppliers in the long run.

Friends of the Earth is urging the Competition Commission to:

• scrap the weak supermarket Code of Practice and bring in much stricter rules to protect farmers and other suppliers.

• consider requiring divestment of stores and land particularly in areas where one supermarket is very dominant

• recommend strengthening of planning rules to make it easier for local authorities to protect smaller retailers and encourage real choice

• consider measures to stop the use of price flexing and below cost selling

• confirm that convenience stores are part of the grocery market so if supermarkets want to buy c-store chains their overall market share will have to be considered

• investigate supermarkets increasing share of non-food items such as books and clothes

Note

[1] www.foe.co.uk/resource/evidence/proposal_for_a_market_stud.pdf (PDF)

[2] www.foe.co.uk/resource/briefings/calling_the_shots.pdf (PDF)

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Published by Friends of the Earth Trust