Tuesday, September 23, 2008
Posted by D. Daniel Sokol
Kate Collyer (UK Competition Commission) and Andrew Taylor (UK Competition Commission) provide some insights on Defining Product Markets in the UK Grocery Industry.
ABSTRACT: On April 30, 2008, the UK Competition Commission published the final report of its two year investigation into the supply of groceries in the UK. This article gives a UK perspective on some of the issues covered in the recent Whole Foods decision by the U.S. Court of Appeals for the District of Columbia. It draws out the key market definition findings in the CC’s investigation, with a particular focus on the CC’s decisions and analysis with respect to those grocery retailers offering a somewhat differentiated product from the UK’s mainstream grocery retailers.
The CC’s investigation into the UK groceries sector was a market investigation under the provisions of the Enterprise Act 2002, which requires the CC to decide under s.134(1) whether “any feature … of each relevant market prevents, restricts, or distorts competition in connection with the supply or acquisition of any goods or services in the UK or a part of the UK.” Where the CC identifies such a feature there is said to be an ‘adverse effect on competition’, and the CC then decides on the action, if any, that should be taken by itself or by others to remedy, mitigate, or prevent the AEC.
Defining the product and geographic markets in which grocery stores compete was a key building block for the CC’s groceries market investigation, providing the framework for the CC’s analysis of competition among grocery retailers. The CC’s guidelines state that “the Commission does not regard market definition as an end in itself, but rather as a framework within which to analyze the effects of market features.” Nevertheless, in this case the CC’s market definition findings perhaps have greater significance in that they are likely to influence future Office of Fair Trading inquiries in the sector.