Supermarkets pricing investigation clears the Big Five of profiteering

Click to follow
The Independent Online

UK supermarkets were in effect cleared of profiteering yesterday as the Competition Commission published interim findings of its inquiry into price competition in the grocery sector. The report was warmly welcomed by retailers and investors, who had feared the watchdog would adopt a tougher stance amid public pressure on "rip-off Britain" charges.

UK supermarkets were in effect cleared of profiteering yesterday as the Competition Commission published interim findings of its inquiry into price competition in the grocery sector. The report was warmly welcomed by retailers and investors, who had feared the watchdog would adopt a tougher stance amid public pressure on "rip-off Britain" charges.

In an "issues statement" sent to 24 retailers, the watchdog said its investigation had produced only "limited evidence" of excessive profits. It also found that supermarket prices had fallen faster in the UK than elsewhere in Europe.

But the commission indicated it had concerns that price competition was limited to a small range of staple items. It also wants to investigate whether the Big Five - Tesco, Sainsbury's, Asda, Safeway and Morrison's - are passing on price reductions from suppliers quickly enough. An analyst said: "Considering people were worried about massive store disposals, this is very tame indeed."

But Phil Evans, a senior researcher at the Consumers' Association, warned that the provisional findings "do not entirely let the supermarket sector off the hook".

The commission, which has been inquiring into the £90bn grocery market for 10 months, following an investigation by the Office of Fair Trading, in effect gave 19 companies, including Marks & Spencer, a clean bill of health. But it singled out the five biggest operators for "further investigation".

The commission said: "[We have] reached the provisional view, subject to further discussion with the supermarkets themselves, that between them, they belong to either or both of two 'complex' monopolies: one regarding the price of groceries; and the other in their relations with suppliers... There are a number of points which the Commission wants particularly to talk to the supermarkets about, including price competition, competition in terms of services and sites for which the consumer may be paying, and how the supermarkets treat their suppliers."

David Reid, Tesco's deputy chairman, said: "After 10 months of investigation, no real evidence whatsoever of excessive profits has emerged." He welcomed the commission's recognition that UK prices have fallen in real terms in recent years and that the trend was better than in several comparable European countries. He also pointed to evidence that "the overall picture... is one of high levels of consumer satisfaction in the UK".

David Bremner, managing director of J Sainsbury, said: "For food shopping, 'rip-off Britain' was always pure myth... The company will continue to co-operate... to understand why the exclusion criteria for the 19 companies have not been applied to the entire group."

The National Farmers Union welcomed the news that the commission intends to inquire further into the stores' relationships with suppliers and the suspicion that access to supermarket shelves may be discriminatory. It said: "While we recognise that supermarkets are farmers' biggest customers, it must be realised that producers must have a fair return."

The commission received more than 200 submissions, held 35 hearings and received written submissions from consumers, all the main grocery retailers, 400 suppliers of groceries and 50 local authorities. Meetings will now be held from March with the Big Five, and conclusive findings will be presented by autumn.

Tesco shares yesterday closed up 0.25p at 164p; Marks & Spencer gained 10.25p to 283p; Sainsbury fell 10p to 330p; and Safeway was down 1.75p at 293p.

Comments