Supermarkets face competition probe

[graham enzk]

Supermarkets face competition probe
The "Big Four" supermarkets are facing a Competition Commission inquiry into their role in the UK grocery market, the Office of Fair Trading said.

It comes after small business groups complained of the large chains' "monopoly position" of the £95 billion sector.

The OFT's initial inquiry found that supermarkets' increased consolidation and their move into the convenience sector could distort competition and harm consumers.

Tesco shares dipped by 2% directly after the OFT's announcement went public.

The Government watchdog found evidence that the big supermarkets' below-cost selling and price flexing could distort competition.

It said some big supermarkets had accrued "significant" land banks which, when combined with the planning system, could act as a barrier to their competitors.

In some cases, supermarkets had attached "restrictive covenants" on selling their sites, the OFT found.

Its four-month inquiry found that the planning regime itself could make it difficult for new stores to open and compete with those already in the market.

The OFT's investigation uncovered a "mixed picture" of the UK grocery market.

On the one hand consumers have benefited from strong competition between the major chains which has led to falling prices, increased choice and improving quality. But the supermarkets' move into the convenience sector could "reasonably be suspected" to distort competition, the OFT found.



© Copyright Press Association Ltd 2006, All Rights Reserved.

[Keerin]

It's also worth adding that the use of loss leaders is banned in France.

(i'll edit this later with an opinion)

[neilcoalesce]

Originally Posted by Keerin

It's also worth adding that the use of loss leaders is banned in France.

(i'll edit this later with an opinion)

Good idea, but how do they enforce it?