Supermarket report comes under fire

A COMPETITION Commission report on supermarkets has been slammed as “totally inadequate” by an independent retail campaigner based in Suffolk and small businesses have expressed disappointment in its findings.

Small businesses and campaigners have accused the commission of letting the big four supermarkets off the hook in yesterday's report on the grocery sector.

But the British Retail Consortium welcomed its conclusion that the groceries market was delivering “a good deal” to consumers, and said supermarkets had again been cleared of acting against customers' interests.

The report said shoppers needed more supermarkets in some areas as it outlined plans to overhaul planning rules and force grocers to sell some of their land banks. It is recommending a revamp of the planning system to allow chains to open new stores as part of its 18 month inquiry.

The relationship between suppliers and supermarkets has also come under scrutiny, and tougher rules to protect suppliers may be on the cards.

But the report effectively cleared supermarket giant Tesco of having a stranglehold on the sector.

Peter Freeman, chairman of the Competition Commission and head of the inquiry group, said: “Our focus throughout this inquiry has been whether consumers are receiving the benefits of vigorous competition, such as value, choice, innovation and convenience - and on most counts the groceries market delivers just that.

“However, we feel that consumers could be even better served. Having looking in detail at local grocery markets, in most areas shoppers have a good choice and benefit from the strong competition between retailers, but in a number of local areas more competition would benefit consumers both locally and more generally.”

Independent retail campaigner Caroline Cranbrook described the commission's report as “a totally inadequate response” to the threats posed by the major supermarkets to the rural economy and the wider community.

Lady Cranbrook, a member of the executive council of the Country Land & Business Association and of the CLA's Suffolk county committee, welcomed the possibility of a regulator to monitor the relationship between the major supermarkets and their suppliers.

However, far from controlling the supermarkets' domination of retailing - which the commission acknowledged in its report- its proposals for reform of the planning system would actually increase it, she argued.

In particular, the recommendation to abolish the requirement for a retail need to be demonstrated would remove the only defence available to local councils against being “bullied” by the powerful supermarket groups into granting planning permission, she said.

“My feeling is that it is a totally inadequate response,” said Lady Cranbrook. “Unless we do something to address the powers of the supermarkets we will end up like America with almost nothing but very large shopping malls, and that is not what people want.

“We need to have stronger planning guidance, not weaker, or we will see a gradual erosion of independent retailing which all my research shows are so valuable in terms of choice and social benefits. The commission fails to recognise that when a supermarket opens, small shops close, and this affects suppliers and the broader rural economy.”

“Part of the problem is that the commission's terms of reference are very narrow,” she added. “Its idea of choice seems to be to have as many large supermarkets as possible. It is not able to take other considerations into account, such as their impact on the wider economy and different sort of choice for consumers.”

Jeanette Thurtle, East Anglian regional organiser of the Federation of Small Businesses, said they felt “quite let down” by the report.

“They just seem to have missed the point,” she said. “This is the third inquiry they have done in seven years, and we are not so much concerned about the land because really that's competition between the big supermarkets.

“We are more concerned there's fair competition across the whole sector. We are also really concerned about the amount of closures of small shops and retailers. We do need to support them.”

Alex Butler-Zagni, eastern region policy adviser with the National Farmers' Union, said: “We need a food supply chain that works in everybody's interests so that farmers and growers are able to supply the quality and choice that consumers expect and deserve. The NFU is committed to working with the major retailers and other customers to forge strong business relationships in the supply chain that will deliver the goods for all concerned.

“In the light of the practices exposed by the Competition Commission, there is a need for a much tighter code of practice to govern the supermarkets' relationships with suppliers. A tougher code, independently monitored, will provide the basis to dispel the culture of fear in the supermarket food chain and replace conflict and suspicion with transparency and trust.”

The British Retail Consortium director general Kevin Hawkins said the report was “a vindication” of supermarkets' dealings with suppliers.

“This is a sensible and balanced report and rightly concludes healthy competition is good for consumers. It clearly demonstrates there is no systematic unfairness in the way supermarkets treat small retailers or suppliers and, above all, demonstrates our highly competitive grocery market has produced value, choice and convenience for customers,” he said.

“The Commission has sensibly rejected prescriptive regulation in favour of possible reform of the existing compulsory Code of Practice. Supermarkets will welcome a debate about why it has been under-used, whether it should be extended beyond just the big four supermarkets and whether there should be some sort of ombudsman.”