The UK's Office of Fair Trading (OFT) is to revoke the decision it made in August when it decided not to call for an investigation into the supremacy of 'Big Four' supermarket groups' in the grocery market.
The OFT is backtracking on its conclusions of Aug 3, where it said that there was no evidence that competition in the grocery market was being restricted. On Friday, the OFT said it would not contest an appeal against that decision by the Association of Convenience Stores (ACS).
This has warmed the hearts of ACS representatives. ACS had been claiming that the supermarkets' unfettered expansion into the convenience store market posed a threat to independent shops.
ACS chief executive David Rae, welcoming the decision of OFT, said: “We are delighted that the OFT has decided to reconsider its previous position. There are real problems in the UK grocery market that are undermining fairness and working against consumers' interests”.
The OFT decision could result in a fresh regulatory probe of the UK food retail sector, whose giant share is cornered by Tesco PLC, J Sainsbury PLC, Asda, and William Morrison Supermarkets PLC.
Earlier, the convenience store sector contested the Office of Fair Trading’s decision taken in August, not to listen to a complaint about supermarkets' behaviour from the Association of Convenience Stores, saying it was based on "insufficient reasoning". But this Tuesday, at the Competition Appeals Tribunal, the OFT itself offered to re-examine the matter.
The ACS will, however, tell the tribunal that the OFT offer is not sufficient enough. It will demand that the matter be considered in a full-scale market review by the Competition Commission.
David Greene of the law firm Edwin Coe, representing the ACS, said that any re-examination of the matter by the OFT was likely to lead to the same conclusion. He added: "The difficulty is that, having found something, it is very difficult for the OFT to undo their reasoning. That's just human nature. There is a grave danger of self-justification". He also felt that the Competition Commission was the appropriate body to look at the operation of the market. Mr Greene also accused that the supermarkets were guilty of practices such as selling at below cost in their convenience store formats.
Tesco, in its defense, said: "Previous inquiries by the OFT and the Competition Commission have found that the market - and Tesco - operates in the interest of consumers. Tesco works hard to bring down prices, something many shoppers on lower incomes rely on."
Posted
on : Mon, 31 Oct 2005 19:40 GMT | General News
By : Mark Richardson
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