Competition among the UK’s largest food retailers looks set to intensify after the publication of a two-year investigation into the country’s grocery sector.
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Late on Friday (15 February), the UK’s Competition Commission published the findings of its report and outlined a series of measures it hopes will boost competition among the so-called “Big Four” – Tesco, Asda, Sainsbury’s and Morrisons.
The commission has recommended using a “competition test” to determine the opening of new stories and has also put forward measures designed to stop retailers from building banks of land assets.
The commission said it also wants to replace the existing code of practice between retailers and suppliers. The establishment of an independent ombudsman to enforce the code has been mooted.
Tesco, the UK’s largest retailer, said the creation of an ombudsman was “unnecessary”.
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By GlobalData“Tesco considers that introducing a new ombudsman could be bureaucratic and an unnecessary cog in a supply chain which has worked well for consumers,” said Tesco’s executive director for corporate and legal affairs, Lucy Neville-Rolfe. “More red tape is likely to stifle innovation and investment and reduce the ability of retailers and suppliers to work together flexibly to deliver the best deals for customers.”
However, Neville-Rolfe said the company was pleased that the watchdog’s proposals did not include plans to force retailers to sell land or stores. “We understand their position on restrictive covenants and had already volunteered to release restrictions on some sites and will comply with others,” she added.
Asda, the UK’s number two retailer, gave a cautious welcome to the commission’s report.
“We also welcome the extension of the code of practice to cover the majority of grocery retailers,” the company said. “We look forward to understanding in greater detail the role of the ombudsman, who we believe should have consumers at the top of their agenda.”
The commission’s proposals will now be put forward for a period of consultation until 7 March. The final, definitive version of the report will be published in May.
