Competition Commission plans to boost supermarket rivalry

LONDON - The Competition Commission has unveiled a raft of measures designed to make supermarkets more competitive and prevent one single chain dominating a local area.

The watchdog published the findings of a major inquiry into competition in the British groceries market this morning, after examining evidence over the course of two years from each of the big four supermarkets - Tesco, Asda, Sainsbury's and Morrisons.

The report comes in the same week that the Office of Fair Trading began a separate investigation into allegations of price-fixing involving the supermarkets and major brands such as Coca Cola, PG Tips and Andrex.

Among the recommendations made by the Competition Commission is the introduction of a "competition test", which would be applied to all planning applications made by the major supermarket chains.

The proposal was drawn up after the commission found there was a "significant number" of local areas where competition among the major supermarkets was limited.

The test is designed to prevent "land agreements" being signed, where supermarkets buy up undeveloped land to stop competitors entering a local market.

Peter Freeman, the Competition Commission chairman, who has led the two-year investigation, said: "In many important respects, consumers are receiving the benefits of competition, such as value, choice, innovation and convenience.

"But we need to take appropriate action to address those areas where they could be served better and where their interests could be damaged in future."

Freeman said that although the report had been sympathetic to independent retailers, it had not found any evidence that the supermarket groups were squeezing them out of the market.

He said: "It is often the effects of rivalry between retailers which benefit the consumer. Competing with large retailers is difficult but our evidence does not show that independent retailers or the whole-salers that supply them are in terminal decline.

"It is not impossible for them to compete and in the current economic climate the benefits of vigorous competition are as relevant as ever.

Freeman acknowledged the OFT probe, but stressed that the commission's findings did not contradict the claims of alleged anti-competitive behaviour currently being investigated.

"The focus of our investigation has been different," he said. "Our conclusion that this is a generally competitive market is not inconsistent with the possibility of some occurrences of anti-competitive behaviour, either now or in the future, and it is quite right that such allegations are thoroughly investigated."

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