Supermarket 'monopoly' under attack

THE Federation of Small Businesses has renewed its call for the Office of Fair Trading to order an inquiry into the “monopoly” position of the UK's leading supermarket chains.

THE Federation of Small Businesses has renewed its call for the Office of Fair Trading to order an inquiry into the “monopoly” position of the UK's leading supermarket chains.

Between 2000 and 2004, more than 7,300 independent retailers closed, with expansion by supermarket giants such as Tesco and Sainsbury's into the convenience store sector claimed by the FSB to have been a major factor.

The FSB believes that this trend will continue unless action is taken to address what it sees as inequitable practices that have allowed supermarkets to dominate both the grocery and the convenience store sectors.

The OFT has previously rejected demands from independent traders for a Competition Commission inquiry on the grounds the dominance of the “Big Four” supermarkets – Tesco, Asda, Sainsbury's and Morrisons – does not represent a technical monopoly.

However, the FSB says that is only because of the OFT's policy of examining the supermarket and convenience store sectors separately when a “common sense” approach would be to regard them as one. Were the two sectors to be combined, Tesco alone would have nearly 40% of the market, it claims.

Terry Taber, FSB regional organiser for Essex, said: “If the convenience and supermarket sectors are analysed together, as common sense suggests they should, there would be an obvious monopoly situation where an inquiry would be triggered automatically. The way they are looked at separately cannot be justified.

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“Such domination of a vital part of UK commercial and family life, based on overly-favourable government policy decisions and unfair trading practices, cannot be allowed to stand. With a full and open inquiry now, a balance can be found where supermarkets and small shops can co-exist, providing value for all consumers.”

The FSB has now written to the OFT demanding a Competition Commission inquiry, including an examination of supermarkets' relationships and trading practices in dealing with their suppliers.

It also wants to see stricter enforcement of the existing Supermarket Code of Practice, a ban on below-cost selling (as already exists in France) and a review of planning policies to ensure that town centre stores are not unfairly disadvantaged.

Jeanette Thurtle, FSB regional organiser for East Anglia, added: “In Suffolk we ran, in conjunction with Suffolk County Council, a very successful buy local campaign called 'Use it or Lose It', to encourage people to shop locally and to raise awareness of the small shopkeepers and retailers.

“At our recent regional conference, one of the keynote speakers was Lady Caroline Cranbrook, who spoke about the future of our community and of the extensive work she has carried out with regard to the food chain and local retailers.

“Supermarkets have their place in the UK retail mix. We are not arguing against them because they are successful – profitable businesses are to be congratulated.

“However, unfair public policy decisions and inequitable trading practices play a large part in that success at the expense of smaller retailers. This is where intervention is now needed by the OFT.”