The decision to propose a new investigation into the power of the biggest supermarkets comes over a year since Friends of the Earth, the Association of Convenience Stores, the National Federation of Women's Institutes and FARM called for it in a submission to the Office of Fair Trading. The OFT has now agreed with several of the groups' key points.
But Friends of the Earth believes there are still some serious omissions in the OFT's report including the issue of supermarkets moving into non-food markets and the impact on suppliers.
Friends of the Earth Supermarket campaigner Sandra Bell said
"The Office of Fair Trading's
decision is good news for consumers and for the high street. It has
finally accepted that there are problems resulting from the growing dominance of
the big supermarkets. It is now crucial that the Competition
Commission proceeds with its investigations urgently and focuses on finding
solutions that will increase consumer choice by encouraging real diversity in
our high streets. It must also be charged with finding new solutions to
protect our hard pressed farmers from supermarket bullying."
The OFT has accepted FoE’s main contention that consolidation in the grocery market could be bad for consumers. It accepts that there is evidence that the takeover of convenience stores, and the practices of below-cost selling and price flexing can distort competition and concedes that a supermarket's dominance in a local market may damage consumer choice.
The OFT has also now highlighted the potential for the planning regime to impact on the high street. This followed a further submission from Friends of the Earth on planning and was a significant change from August 2005 when it claimed that planning was not an issue for the competition authorities.
The decision to propose an investigation is a major change from the OFT's previous position in August 2005 that there was no evidence of practices adversely affecting competition or harming consumers. The OFT was forced to re-consider its position following a legal challenge led by the Association of Convenience Stores and backed by Friends of the Earth.
Source: Friends of the Earth Press Release 9 March 2006