Supermarkets get vote of confidence

Updated 23.29 Wed Oct 31 2007
Keywords: supermarket, Competition Commission

The Competition Commission has found that UK supermarkets are delivering a "good deal" for consumers, but greater competition is needed.

The watchdog has released the provisional findings of an 18-month investigation, looking into the relationship between suppliers and retailers, local competition and planning issues.

"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" - Peter Freeman

The 269-page report details proposals aimed at improving competition throughout the sector.

Recommendations include reviewing the planning system to allow greater scope for developments on the edge of town centres, while maintaining constraints on out-of-town supermarkets.

The watchdog is also proposing that grocery retailers are prevented from holding on to land to stifle competition and is looking at barring the use of "restrictive covenants" on sale of land, under which land cannot be used by a rival supermarket.

The Commission also raised concerns over the relationship between supermarkets and suppliers and said changes were needed to help offer greater protection to suppliers.

But it found that Tesco - which has often come under fire over its dominance of the sector - was "not in such a strong position that other retailers cannot compete".

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 looked 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."

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