The report on the supermarket sector by the UK's Competition Commission has been the subject of considerable discussion in the media in recent weeks with regard to how tough the regulators have been on the UK's powerful supermarket operators. However, Peter Wynne-James, managing director of consultants MPC Associates, believes the report has fundamental weaknesses in how it defines the retail sector in the first place.

The Competition Commission's report on supermarkets in the UK has a number of flaws but if there is one glaring overall weakness it lies in the report's failure to define exactly what it means by hypermarket, superstore and supermarket.

However, while the fact that the terms hypermarket, superstore and supermarket are not adequately defined may be a fundamental weakness, the report contains a number of other serious flaws and omissions which reflect an unawareness of certain important aspects and implications of the expansion of out-of-town retailing.

The Commission has failed to recognise that hypermarket and superstore saturation levels have already been reached in many areas of the UK, and has equally ignored the negative impact in terms of increased traffic congestion and carbon emissions that new hypermarkets and superstores would have in such areas.

The Competition Commission report also largely ignores the substantial trading advantages of hypermarket and superstores with their own free car-parking areas. Furthermore, the Competition Commission's lack of research in calibrating the detrimental effects of hypermarkets and superstores on small, town-centre supermarkets and convenience stores represents another key failing.

The plight of households without a car in villages (9%) and town fringe areas (19%) and the importance of retaining small local stores to serve local populations are both ignored by the report's authors. Meanwhile, the need to educate town and country planners and local authorities on the hidden commercial advantages of out-of-town shopping is not taken into account by the Commission.

MPC Associates, which has developed its own formula for assessing hypermarket and superstore saturation levels based on 37 years of research, is concerned that the Competition Commission is totally unaware of the "hidden commercial elements" of out-of-town trading. In this respect, it is important that the general public should be made aware of the real issues which are at stake.

Furthermore, MPC believes that these same issues should be made apparent to local authority planning departments throughout the UK. It is not surprising that so many planning approvals have been given for out-of-town hypermarket developments in areas where saturation levels have already been well exceeded. Usually the planners have been blamed but clearly they need to be educated.

MPC's latest research - we are currently in the process of analysing 1,800 towns and cities in the UK with populations over 4,000 - will show that in cities and towns in the UK where saturation has been reached, those saturation levels are well in excess of ratios seen in Toulouse in France, widely regarded as having more out-of-town retail competition than any other city in Europe.

A case in point is Hereford, with a population of 56,000, which has four hypermarkets, based on definitions given by the French and German self-service institute in the late 1960s. All four hypermarkets are within six minutes' drive time of the city centre and within 12 minutes of each other. The ratio of saturation in this particular town is now 32% higher than in Toulouse. Needless to say, all four hypermarkets are causing increased traffic congestion with excessive carbon emissions.

On the other hand, competition below saturation level is perceived as beneficial to consumers. Indeed, there are clear benefits for the car-borne public in establishing hypermarkets and superstores, provided that they are developed in unsaturated areas.

But while the convenience offered by superstores is clearly popular with consumers, this has to be balanced against the importance of the survival of town-centre retailers who serve the 27% of non-car-owning households in the UK, and those who find shopping in town centres more convenient.

MPC's research into the effects of the opening of three out-of-town hypermarkets on town-centre trade in the French city of Nancy shows that it will be supermarkets that will suffer most, rather than small independent grocers. (For more insight on this point, click here).

Sanity must prevail in ensuring that in future all towns and cities which have reached hypermarket and superstore saturation levels are protected from further edge- or out-of-town development.

Peter Wynne-James is managing director of the marketing, management and economics consultancy, MPC Associates, which was founded in 1968 and is a specialist researcher in out-of-town shopping.