Planning shake-up targets supermarkets

The Competition Commission is expected to recommend changes to the planning system today to discourage supermarket chains from developing local monopolies.

The commission will move a step closer to the conclusion of its two-year probe into the £95 billion grocery sector with the publication this afternoon of its provisional recommendations for the industry.

It is understood the commission is likely to call for competition to be added as a factor in deciding on planning applications.

Peter Freeman, the commission's chairman, is expected to set out the details of a new competition test in which planners would consider the identity of a supermarket and its local market share before granting planning permission.

In October, the commission's provisional findings revealed around 200 areas of the country where consumers had little choice of where to shop.

It said: "A lack of competition in certain local markets not only disadvantages consumers in those areas but also allows retailers to weaken their offer to consumers nationally."

The Commission also found that of 520 landbank sites owned by supermarkets, more than a fifth were potentially being used specifically to stop rivals building competing stores.

It is anticipated that Mr Freeman will also detail the powers of a new ombudsman to supervise the relationship between the "big four" supermarket chains - Tesco, Sainsbury's, Asda and Morrisons - and their suppliers.

Suppliers have claimed they are forced to bear the brunt of supermarkets' price-cutting promotions.

The current investigation is the third of its kind into competition in the sector since 2000, following a market-wide inquiry eight years ago and an examination into the issues arising from a battle for Safeway three years later.

Other proposals outlined in the October report, and which could feature in today's announcement included reviewing the planning system to allow greater scope for developments on the edge of town centres, while maintaining constraints on out-of-town supermarkets.

Michael Hart, of the Small and Family Farmers Alliance, described the big supermarkets as "very demanding" and "very controlling".

"Not that we aren't prepared to produce the best and, to the best of our ability, meet their demands but for anyone selling below the cost of production for a number of years, life is very difficult," he told GMTV.

"When you have four companies controlling between 70-80% of the retail market, it's well recognised by economists that you have four companies getting together which control the market even without getting round a table and fixing prices, because of their power."

He said he was hoping today's report would have "some teeth" and would investigate the supply chain independently and "make sure that it's fair and not being manipulated in any way".