EU calls for new supermarkets inquiry

Major supermarket chains across Europe are potentially abusing their market position to drive down the prices paid to suppliers, the European Parliament declared yesterday.

Just days after the UK competition watchdog recommended a tougher code of practice for supermarkets in Britain, the European Union assembly called for an investigation into the practices of the big chains across the continent.

The assembly said that the EU's competition body, the European Commission, should intervene to protect consumer choice and the environment.

In a non-binding declaration, the EU assembly said a small number of chains were becoming "gatekeepers" controlling the access of farmers and other suppliers to the EU's 490 million consumers. It added that evidence from the EU suggests the major grocers are abusing their buying power to force down prices paid to suppliers to "unsustainable levels and impose unfair conditions on them".

The assembly "requests the commission to propose appropriate measures, including regulation, to protect consumers, workers and producers from any abuse of dominant position or negative impacts identified in the course of this investigation," the declaration said.

A spokesman for the commission said it would comment after receiving the Parliament's document.

On Friday, the UK's watchdog delivered its latest findings as part of its two-year investigation into the supermarket sector. The Competition Commission revealed plans to resolve disputes between the biggest retailers and suppliers and also announced a new "competition test" to be considered by local authorities when granting permission for new stores in the hope of preventing the creation of further so-called "Tesco towns", where a single chain dominates.

However, it fell short of ordering the biggest players – Tesco, Asda, Sainsbury's and Morrisons – to sell off their stockpiled land holdings or divest themselves of shops. Asda, Sainsbury's and Tesco welcomed the recommendations, but environmentalists and smaller retailers said the proposals did little to promote genuine retail choice.

Andrew Simms, policy director of the think-tank the nef (the New Economics Foundation) and author of Tescopoly, said: "The big retailers are establishing collective dominance from which it will be increasingly hard to escape."