The UK’s competition watchdog has stood by plans for a planning test for the country’s supermarkets and insisted the proposal will benefit consumers.
The Competition Commission said this morning (16 July) that it would publish its final verdict in October but, in what it termed a “provisional decision”, it defended plans for the so-called “competition test”.
The test, which has been fiercely opposed by Tesco, the UK’s largest retailer, will seek to ensure no single company accounts for over 60% of grocery sales in a given area.
The Commission first argued in April 2008 that regulation was needed to improve competition between UK supermarkets but, after an appeal from Tesco, the regulator was forced to revisit its proposals.
However, the Commission today insisted the test would boost competition and benefit consumers.
“Our provisional conclusion is that the Test would act … to facilitate and encourage entry and expansion in areas of high concentration by preventing a strong incumbent from reducing its competitors’ incentives and ability to enter or expand,” the Commission said.
Tesco, however, dug in and maintained the test was a “misguided proposal”.
“We are concerned that the Competition Commission findings rely heavily on far fetched assumptions which don’t reflect the reality of the planning system,” said Tesco executive director Lucy Neville Rolfe.
“The main effect of the proposed test will be to deter extensions which will prevent many older stores being updated to provide a better offer for customers up and down the country.”
Neville Rolfe added that Tesco would seek “further discussions” with the Commission before the final verdict is issued in October.