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Grocery inquiry remedies are too timid, says ACS

18 February, 2008
Following a lengthy inquiry the Competition Commission's findings do not go anywhere near far enough to address the problems faced by retailers and consumers in the UK grocery market, according to James Lowman, chief executive of the Association of Convenience Stores. The Commission's
provisional decision on remedies, announced on Friday (February 15) include:* advising the Government to provide for an additional ‘competition test’ for local planning authorities to apply when assessing planning applications for new large grocery stores. The Office of Fair Trading will be given an advisory role as a statutory consultee.* a range of measures targeted at ending the use of restrictive covenants on land or buildings that could be developed or used by competitor grocery retailers* the replacement of the Supermarket Code of Practice with a new Grocery Supply Code of Practice which will:* be extended in terms of scope to include all grocery retailers with a turnover greater than £1 billon* require the appointment of in house code compliance officer and better record keeping* be policed by a newly established ombudsman to follow up complaints and proactively investigate breaches of the Code.ACS Chief Executive, James Lowman said: “This Inquiry has run for nearly two years and it is extremely disappointing that the proposed remedies are so timid. There is a very real problem in this market and the measures recommended go nowhere near far enough.” On planning reforms Lowman said: “We welcome the fact that the Competition Commission has made no recommendations on the need test and the sequential test. We were very clear in our message to the Commission that these decisions were for Government Ministers to make. We continue to argue for a strong town centre first policy backed by planning tests that provide local authorities and local people with the widest possible scope to decide what is best for their area.“We are cautious about proposals for a competition test and will remain so until we are comfortable that the working of the test will actually achieve its ends without creating loopholes through which supermarket developers can impose their will against the wishes and needs of local people. We also want to see very strong safeguards against the Office of Fair Trading being given greater weight in decision making than local people.”Lowman also commented on proposals to replace the Supermarket Code of Practice and create an ombudsman: “The decision to extend the scope of the Code of Practice is bizarre. The Code was created to check the power of the companies that operate from a dominant position in the market and exert buyer power over suppliers. To extend the scope beyond the Big Four is to ignore the fact that their dominance is greater now than when the code was created, the differentials in terms of price has extended from 13% in 2000 to 16% as found by this Inquiry. Extending the scope of the code will not address the imbalance of buyer power that exists between the Big 4 and everyone else.“We welcome the creation of an ombudsman, but only if this regulator is given teeth. The biggest problem under the last code was the lack of complaints engendered by a climate of fear amongst suppliers, if the new system continues to rely on complaints the problem will remain. We wait to see whether the proactive powers of the ombudsman go far enough.“ACS has consistently called for the introduction of transparency of buying prices as an alternative to the current Code. Only transparency would ensure that suppliers are not forced into unsustainable deals and that retailers that are buying products of similar quantity can obtain same price.”



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