Outlook: No point in this supermarket probe

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The Independent Online
THE SUPERMARKETS have become resigned in recent weeks to the likelihood of a full Monopolies and Mergers Commission investigation, both of their prices and the way they treat suppliers. The Office of Fair Trading is expected to publish the findings of its preliminary probe by the end of the month and, given what the Chancellor said in the Budget about his determination to crack down on "rip-off" Britain, the industry expects a reference shortly thereafter.

Nobody outside the City has much sympathy for the big supermarket groups, but even so, it is hard to see what an MMC inquiry is going to achieve, outside some political point-scoring.

There may be something to be said for putting the frighteners on an industry which undoubtedly attempts to squeeze both customers and suppliers in equal degree. But even if some form of complex monopoly, or series of local monopolies, does exist, what can the Government do about it? Another Price Commission? Heaven forbid. With the brewers, the Government settled on a break-up, but it didn't stop the price of beer from continuing to rise.

The truth of the matter is that it is possible to find most things that supermarkets sell at cheaper, and sometimes considerably cheaper, prices. Furthermore, most consumers know this. But it is inconvenient and very time-consuming to shop in this way. The trade-off, then, is between higher prices and inconvenience. The higher grocery prices that car-less people in deprived areas pay is a different issue.

In fact, there are two obvious solutions to the problem of high supermarket prices. First we could join the euro, giving consumers access to the economies of scale that spring from extremely large trading regions. Second, we could allow our green and pleasant land to be ploughed up for the development of American style shopping malls, and the roads to service them. Fundamentally, this is why prices are cheaper in the US - the economy is much larger and there are few planning constraints. For some reason the Government doesn't seem immediately inclined to either course of action.

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