Watchdog probes supermarkets 'stranglehold'

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A major inquiry into the grocery sector said today that it was looking at whether Tesco and other supermarkets stifled competition by creating strangleholds in local communities.

Outlining its "emerging thinking", the Competition Commission said it was "concerned with whether Tesco, or any other supermarket, can get into such a strong position, either nationally or locally, that no other retailer can compete effectively."

The Commission said it needed to look at the choices shoppers have in particular areas and how competition works between retailers of different sizes.

The inquiry chairman Peter Freeman said: "It would be a cause for concern if supermarkets, either individually or collectively, were in a position to increase prices or lower their offer in any particular locality or region because of lack of effective competition."

Campaigners have accused the UK's biggest supermarket retailer of creating "Tesco-towns", through the spread of different formats ranging from Extra hypermarkets to Express convenience store shops.

Today's progress report stopped short of drawing any conclusions about practices in the sector. Having gathered a large amount of evidence, the review panel will now look at matters in detail before publishing its provisional findings.

The Commission did say that evidence gathered so far suggested there were not widespread problems in the relationship between grocery retailers and their suppliers.

Mr Freeman said: "We have found that bigger buyers do not always appear to get better terms from suppliers, and food and drink manufacturers and processors, as well as wholesalers, seem to be in reasonable shape."