Store giants accused of `commercial tyranny'

Think-tank claims supermarkets use `awesome' power to kill rivals, pena lise farmers and load costs on consumers
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The big supermarket chains have established a form of "commercial tyranny", killing off their rivals, penalising farmers and food producers and forcing people to spend more time and travel greater distances to do their shopping, according to a rep ort published today.

The unchecked power of groups such as Sainsbury, Tesco and Safeway is "making a mockery of UK competition policy", a study published by the Institute for Public Policy Research, the left-of-centre think-tank, says.

The report, "Off Our Trolleys?", by Professor Tim Lang of Thames Valley University and Hugh Raven, director of the Safe Alliance, an environmental research body, says that in many areas of Britain individual superstore groups now account for more than 25per cent of local sales - the usual definition of a monopoly. Yet there has been no investigation by the Office of Fair Trading or the Monopolies and Mergers Commission.

The study argues that the store groups have used their "awesome" power to destroy smaller, independent shops and undermine British horticulture.

They have also been vociferous supporters of the roads lobby, it says, largely because more roads and greater car use indirectly subsidises their operations - it disguises the real cost of siting stores out of town, setting up centralised distribution systems and importing goods from overseas.

Between 1975-76 and 1989-91 the average annual number of shopping trips grew by 28 per cent and the total distance travelled for shopping by 60 per cent. In the Eighties, people spent an average of 70 minutes a day shopping, compared with 41 minutes in the Sixties.

The superstores have loaded the extra time and costs - including the pollution from greater vehicle use - on to individuals and society, the report says. A separate analysis by the transport academic Dr John Whitelegg says that the social subsidy for an out-of-town store compared with one in a town centre is £25,000 a week - equivalent to more than a £1bn a year nationally.

The market share of the multiple grocery chains - those with more than 10 stores - has risen from 24 per cent in 1983 to more than 50 per cent and is forecast to rise to 70 per cent by the end of the Nineties. They dominate farmers and growers by threatsto "de-list", or suspend contracts, or to reject produce at the last minute. The effect has been to throw thousands of producers out of business and reduce the variety of fruit and vegetables.

Between 1982 and 1992 prices received by farmers from supermarkets rose by 18 per cent, but food prices to consumers rose by 52 per cent. While fresh-food profit margins increased from 21 per cent in 1986 to 28 per cent in 1990, farm incomes fell by 35 per cent from 1982 to 1992. Although British supermarkets' profit margins are higher than many of their United States and European competitors, consumers are denied full information about the true costs of products, partly because of long and complex distribution chains. "How could [consumers] possibly know that some cartons of milk they buy have been transported hundreds of miles at great environmental cost? Or that their shrink-wrapped tray of apples has been treated with an array of agrochemicals? Or that the fresh beans in the plastic bag are forcing African farmers off their land?" the report says.

Professor Lang adds: "Consumers these days go to what used to be the warehouse and the warehouse is on the motorway. Both food and consumer are travelling further to meet each other. Consumers who worry about roads, waste and pollution should think hard before the next drive to the superstore."

The report criticises superstores for penalising the elderly and low-income groups, by concentrating on the car-driving middle classes and for ignoring the environmental costs of disposable packaging. It says that competition policy in the United Kingdom, including rules to ban predatory pricing, should be strengthened. Monopoly inquiries should examine local, as well as national, market shares and take account of social and environmental criteria.

Professor Lang says that if such measures do not halt the supermarkets' growing power, more draconian action - such as breaking groups up into smaller units - might be needed.

Sainsbury's described the report as "unreasonably negative" and said it did not portray a balanced or true picture of the industry. "Supermarkets are highly successful because they provide shoppers with what they want. This report fails to recognise the tremendous popularity of supermarket shopping."