Supermarkets Hit Back At Plans To Face Regulatory Scrutiny

Tue, 27 May 2008
 
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UK retailers have responded to plans by the Competition Commission to further curb supermarket dominance of the £95bn grocery sector by warning they could lead to higher prices for consumers .

The findings of the competition watchdog's final report on a two-year probe into the UK grocery industry revealed that supermarkets face greater scrutiny of their expansion plans and relationships with suppliers from authorities.

The report, which investigated Britain’s four largest supermarket chains - Tesco, Asda, Sainsburys and Morrisons, recommended introducing a 'competition test' to prevent one supermarket dominating the sector.

It also recommended action to prevent land agreements which can restrict entry by competitors, the creation of a new strengthened and extended Groceries Supply Code of Practice, and a recommendation to establish an independent Ombudsman to oversee and enforce the Code.

Asda chief executive Andy Bond warned: "The commission's proposals on the new code and an ombudsman could cost the industry hundreds of millions, leading to higher prices for customers which will hit families hard at a time when they are already feeling the pinch," he said.

Tesco CEO Sir Terry Leahy echoed the view of his rival, saying: "We welcome the broadening of the supplier code, but we are not sure that the main recommendations will improve the life of the British consumer ."

Sainsbury’s also welcomed the proposed competition test and Code changes but opposed creation of an Ombudsman, claiming it is "an unnecessary measure and that any issues should be addressed through the proposed changes to the existing code of practice ."

The British Retail Consortium added to the criticisms of an ombudsman, stating that "there can be no justification for the introduction of a multi-million pound quango which would ultimately be paid for by customers".

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