UK Supermarket Report - An Opportunity to Respond

Posted by D. Daniel Sokol

The UK Competition Commission released its provisional findings on grocery competition.  In its news release, the CC reported:

In its provisional findings report, published today, the CC states that 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. Further, some retailer land holdings and other practices, such as restrictive covenants, mean that competition is not as effective as it could be in a number of areas.

The CC is also concerned about the ability of grocery retailers to transfer excessive risk and costs to suppliers through various purchasing practices, such as retrospective changes to supply agreements. The CC considers that these practices could damage investment and innovation in the supply chain to the ultimate detriment of consumers.

The CC will now consider a range of measures to address these concerns before deciding on its final remedies. Options under consideration include the lifting of restrictive covenants and exclusivity arrangements, sales of land holdings, and recommending changes to the planning system to place greater weight on competition and choice. The CC will also consider changes to the Supermarkets Code of Practice (SCOP), which regulates retailer-supplier relationships.

The CC has identified findings regarding market definition, concentration, barriers to entry, effects on convenience stores and small retailers, coordination between grocery stores, supply chain issues, and remedies.  Moreover, the CC has asked interested parties to respond.  Hopefully the UK experience will have lots to teach those in other countries thinking about supermarket issues.