Big supermarket inquiry under attack

A MAJOR inquiry into the dominance of the “Big Four” UK supermarkets has not done enough to safeguard small retailers, a leading Suffolk campaigner warned last night.

Brad Jones

A MAJOR inquiry into the dominance of the “Big Four” UK supermarkets has not done enough to safeguard small retailers, a leading Suffolk campaigner warned last night.

The Competition Commission unveiled a planning shake-up yesterday in a bid to boost competition in the £95 billion grocery market.

But it immediately came under fire from Lady Caroline Cranbrook, of Great Glemham, who has spearheaded a national fight for independent retailers.

She said she was “amazed” the report had not accepted the impact supermarkets were having on smaller retailers, which threatened the viability of market towns.

She successfully campaigned against plans for a Tesco store in Saxmundham in 1997. Had it gone ahead, 67 out of 81 stores in east Suffolk predicted they would close.

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Lady Cranbrook welcomed the report's call for an ombudsman to protect food suppliers, but added: “It is very distressing they haven't taken into account the need to safeguard a wide range of retailing outlets.

“If we end up with the whole country being totally saturated with supermarkets it will wipe out the small shops and the new producers. The impact could be disastrous, particularly in our part of England.”

But the commission hit back last night - insisting the impact of supermarkets on independent retailers is not as bad as some people believe.

A spokesman said: “We looked in enormous detail at what detrimental effects supermarkets might be having [on smaller retailers], and we don't view the effect as anything like as drastic as the independent sector.

“Supermarkets are not automatically driving small shops out of business.”

The culmination of its two-year probe into the retail sector was announced yesterday, and will result in a new 'competition test' in planning decisions on larger stores as well as action to prevent land agreements restricting competitors from entering the market.

The UK's four biggest supermarkets - Tesco, Sainsbury's, Asda and Morrisons - all came under scrutiny in the investigation.

The commission said: “Although, in many areas, there is good choice and strong competition between retailers, there are also a significant number of local areas where larger grocery stores face limited competition and local shoppers lose out.”

Measures include involving the Office of Fair Trading (OFT) in all planning applications for new grocery stores bigger than 1,000 square metres.

Restrictive covenants, which retailers can use to prevent competitors building new stores, will also be lifted or face scrutiny.

Retailers will not be allowed to retrospectively change their agreements with suppliers or shift risks and costs on to them, and will have to enter into arbitration to resolve disputes.

The report said consumers were benefiting from the intense rivalry between stores and concluded that independent retailers were “not in terminal decline”.

But Lady Cranbrook, whose work to support small retailers has been lauded by the likes of top chef Gordon Ramsay, said: “I think the CC has failed to address the saturation of retailing by the supermarkets and the consequences this is having - and will have - on independent retailing, small-scale food production, social exclusion and the viability of the market towns.

“At a time when local food production, distribution and retailing has never been more important, the CC has chosen to ignore the vitally important part that local food chains will play in the future as the global marketplace becomes destabilised.”

The Association of Convenience Stores (ACS) also criticised the report as a “failure”.

Tesco said it was concerned about competition testing and “counter-productive” plans for an independent ombudsman.

Chief executive Sir Terry Leahy said: “We welcome the recognition of the benefits we have brought into the convenience sector and that the commission has laid to rest many of the original claims that led to this inquiry.”

But he said: “We are not sure that the main recommendations will improve the life of the British consumer. We welcome the broadening of the supplier code, but we share the concerns of panel member Professor Bruce Lyons that an ombudsman would be counter-productive and would reduce the benefits of competition.”

Sir Terry added: “We are more than happy to work within the new rules on restrictive covenants. On the other hand we can't see how the proposed competition test would have any benefits at all. This test would make the planning process even slower and jeopardise job-creating regeneration schemes.

“We believe it would take away power from consumers to choose where they shop.”

Current rules which state a “retailing need” must be established before a new store gets the go-ahead - which played a key part in the decision to reject Tesco's Saxmundham application - are also under Government review.

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