Supermarket giants get off lightly

The Competition Commission’s long-awaited report on the £120bn UK supermarket industry finally arrived today – and believe it or not, it’s a bit of a damp squib.

Last Updated: 06 Nov 2012

Some were hoping that Commission would try to rein in the ambitious expansion plans of the four big guns – Tesco, Sainsbury, Asda and Morrison – and strike a blow for their poor downtrodden suppliers. But after 18 months of investigation, it basically decided there was nothing much to worry about.

In fact, the report actually recommended making it easier for the big boys to open new stores by simplifying the planning permission process. Apparently we need at least three big supermarkets within ten minutes’ drive to create proper competition, and currently just one in three of us has this pleasure. So rather than having fewer massive superstores, we’re actually going to get even more. Which will no doubt delight local shop-owners.

The only thing the report did criticise was land-banking, where supermarkets buy up prime real estate near their stores and leave it empty to prevent rivals muscling in on their turf. Although admittedly the only losers from this practice tend to be… the other three big supermarket chains.

Beleaguered suppliers hoping to see the four retailers get their comeuppance were also in for a disappointment. The Commission said it found no evidence of suppliers being bullied on prices, despite trawling through thousands of emails. In fact, it noted that lower-priced supplies were actually good news for consumer prices (although the same could be said of slave labour, and nobody thinks that’s a good idea).

Its one concession was to suggest an independent body to monitor suppliers’ complaints – presumably following the ‘if in doubt, set up a watchdog’ principle.

This is the third time in seven years that the Competition Commission has scrutinised the supermarket industry. With the Big Four controlling 75% of the UK grocery market (Tesco now takes £1 in every £7 spent in UK shops), the backlash from suppliers, smaller retailers and various other campaign groups has been growing – yet every time, they get away with nothing more than a light slap on the wrists.

Which all begs the question – how good are the Big Four’s lobbyists?

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