The Competition Commission is to focus its attention on local markets for the next stage of its inquiry into the UK’s grocery industry.

The ‘emerging thinking’ report published today (January 23rd), has identified areas for further investigation. These include closer analysis of the supermarkets’ buying power and relationships with suppliers, and the effects of below-cost selling and price-flexing on smaller retailers.

Peter Freeman, chairman of the Competition Commission, said: “Our principal concern now is to focus on competition between retailers at the local level, where it most matters to consumers, as this is where many of the potential concerns we have would be evident.”

He said they now needed to see what choices shoppers had in particular areas and how competition works between retailers of different sizes.

“It would be a cause for concern if supermarkets, either individually or collectively, were in a position to increase prices or lower their offer in any particular locality or region because of lack of effective competition,” he added.

Responding to the report, the Association of Convenience Stores (ACS) has said fuel retailers should be encouraged by the fact that the Commission was recognising the issues of below-cost selling and price-flexing, with evidence from the fuel market having already been submitted.

However, ACS chief executive James Lowman stressed that a much closer examination of buying power, which often disadvantages smaller retailers, was needed. “We are concerned that the Commission appears to not be taking these concerns seriously enough and will be pushing them to go further,” he said.