Supermarket Dominance

The last decade has seen an unprecedented growth in the power of the main grocery retailers in the UK. This year, Tesco have announced profits of some £2.2 billion. There is little doubt that supermarkets have a major role to play in providing consumers with what they want. The CLA does not dispute this and we are realistic enough to know that the majority of the public is unlikely to change their shopping habits to often more expensive products.

But this growth comes at a cost. The very buying power of the supermarkets leads to:

• Distortion of the market to the detriment of suppliers;
• The creation of a climate of fear amongst suppliers and producers who are unwilling to provide evidence of alleged abuse by the supermarkets;
• Uneconomic trading conditions where the prices paid to producers and suppliers are so low as to make a business simply uneconomic to continue.

Clearly it is time we redressed this imbalance. That is why the present Competition Commission inquiry into the grocery sector is so important. The Competition Commission is the one government body that can force through change and redress the imbalance. That is why we are calling on the Commission to:

• Issue a clear statement that the anonymity of a producer or supplier giving evidence is legally guaranteed;
• Recommend the creation of an Independent Ombudsman to guarantee the rights of suppliers in the event of a dispute;
• Fully analyse the practice of below-cost selling in order to establish the distorting effect on the market;
• Replace the two market definition in the grocery sector (multiple stores and convenience) with one market given the expansion of the major retailers into the convenience store sector.

We believe that it is high time that the grocery market was brought into balance and with far greater transparency. Only then will suppliers and producers be able to receive a fair price for the goods they provide to the public. We are therefore calling on the government to redress the imbalance between suppliers and supermarkets so that family businesses can continue to trade and that the British public is given a real choice.

Please show your support for the CLA's supermarket petition by:

clicking here to fill in our online petition

- or -

sending an e-mail to supermarket.petition@cla.org.uk

It will be formally submitted to the Competition Inquiry into the grocery sector by CLA President David Fursdon in September 2006.

Dr Charles Trotman – Head of Rural Business Development

An economist, advises on rural economic issues, particularly food policy, rural tourism, equine issues and telecommunications policy.

Phone: 020 7460 7939
FAX: 020 7235 4696
Email charles.trotman@cla.org.uk