business news in context, analysis with attitude

The Sunday Times of London reports that the UK Competition Commission is expected this week to release provisional findings of an 18-month supermarket industry inquiry, in which it will “recommend a shake-up of planning law to stop any of the big four supermarket chains seizing a dominant position in a local market.”

Such a recommendation would specifically reject one of market leader Tesco’s central arguments – that the British grocery industry should be viewed nationally, and not on a town-by-town basis.

According to the Times story, “In a detailed examination of competition in and around large stores, investigators found that just over a third of all stores have no more than two rivals within a 10-minute drive. Nearly 100 big stores have no competitors at all within a 10-minute drive.

“There is expected to be a warning note sounded on supermarkets’ land holdings, which critics have said might be used to block competition.”

It won’t be all bad news for the UK’s four major supermarket chains, however. According to the Times, “In revealing its provisional findings on Wednesday, the commission is expected to say that supermarkets have broadly done a good job for the consumer. Food prices are down 7% in real terms since 2000, and the overall picture is one of tough competition, the commission will say.”
KC's View:
It is hard to see how a government can regulate these sorts of issues without specifically hampering a company’s ability to compete. This doesn’t just mean Tesco – while retailers such as Sainsbury and Asda might benefit in the short term from a change in planning laws, such policy changes might also restrict their abilities to compete in the long term.