Grocery market investigation criticised
The Competition Commission (CC) has been accused of going over old ground with the issues it plans to cover in its investigation into the grocery market, by the head of a leading company offering financial advice to those in the sector.
Duncan Swift, head of food and agriculture business recovery at Grant Thornton, was concerned that many of the issues were “systematic of the market dominance of the major supermarkets” and were not new.
Supply chain issues, retail competition and planning; land use and other barriers to entry would all be examined, according to the CC's Statement of Issues. In particular, retailer treatment of suppliers, specifically whether it threatened the economic viability of suppliers and wholesalers or caused them to limit their product ranges, would be investigated.
The issue of whether suppliers were forced to charge higher prices to retailers without buyer power than to retailers with buyer power would also be looked at.
“But you can't really criticise them [retailers ] when the regulatory playing field is so ill-defined and is purely governed by the code of practice, which isn't policed by the Office of Fair Trading (OFT), where 'reasonable terms' are not defined, and the OFT doesn't stand up to incidents of clear market abuse,” said Swift.
Swift would like to see the present voluntary code changed to a legal code, with an independent ombudsman to enforce it. “I would expect the ombudsman and the OFT to more clearly define what are reasonable terms [in the code] and to require the supermarkets to put the key terms in writing.”
He also suggested that the CC had given itself a “get out of jail” card in the wording of one clause, which states: 'We must distinguish competition issues from other issues of public concern associated with grocery retailing, which we have no power to investigate or resolve.'
“It will be of great interest to see how it deals with the cut off between issues that it will and won't look into,” said Swift. However, he was pleased that the supply chain issues seemed to feature prominently and added: “Clause 10e infers that there will be some retrospective view of the impact of the code of practice, which would be good.”
Evidence gathering has now begun and an 'emerging thinking document' containing the findings will then be published, with more in-depth results being announced in 12 months.
The CC encouraged the submission of evidence, which would be treated confidentially.
