Regulator plods on with supermarket sweep

Today will see the regulator's latest effort to get tough on supermarkets, and tough on the causes of supermarkets.

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Last Updated: 06 Nov 2012

The Competition Commission is due to reveal yet another report on the supermarket sector this afternoon, after its latest two-year round of dithering about whether Tesco, Asda, Sainsbury’s and Morrison’s are unfairly trampling on the competition and bullying their suppliers.

The main bone of contention has been whether shoppers in some parts of the UK towns don’t have enough choice in spending their hard-earned dosh, particularly in the so-called ‘Tesco towns’. Tesco’s general dominance has inevitably led to cries of foul from its rivals, who have accused it of cornering the market and generally being a great big bully.

So is there likely to be anything new this time round? After all, these pronouncements seem to come out every ten minutes, and usually involve little more than a light slap on the wrists for the big boys. One possible outcome is that Tesco is forced to sell off land that it’s bought up to prevent rivals using it (a trick known as ‘land-banking’). And there could also be changes to the planning process, aimed at making it easier for rivals to open up stores in competition with the local Tesco.

The supermarkets’ relationship with their suppliers will also come under scrutiny, with some suggestions that a watchdog may be set up to stop the big guys squeezing the little guys until the pips squeak (although how this would work we have no idea –how on earth would a watchdog work out a fair price for 100kg of organic turnips?). The big four have so much buying power that they can afford to lean on their suppliers for better terms, or pass on the cost of discounting. Since there seems to be a fairly aggressive price war in the sector at the moment, 2008 is likely to be tin hat time for suppliers.

But others may profit from this latest crackdown. With Tesco clearly being cast as the sector’s bete noire, and the rest of the big four also feeling the squeeze, there could be an opportunity for smaller rivals Waitrose and M&S to cash in. Here in MT’s backyard of Hammersmith, for example, Waitrose has just been given the green light for a huge £110m development on King Street – much to the chagrin of Tesco, which was desperate to launch the first of its new department stores there. It’s the second time that it’s been thwarted in its attempts to open a big store here (Vanessa Redgrave rounded up some chums to block a previous attempt four years ago) so it’s probably be sick to death of the place.

Of course the likelihood is that nobody will be satisfied by this report: Tesco will feel hard done by, Asda and co will feel they haven’t had enough support to close the gap, and smaller competitors and suppliers will feel it hasn’t gone far enough. But then we’re about to get a shiny new Waitrose, so we’re all right Jack.

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