You are in > manchester.com  > News > Supermarkets face competition probe

Business

Supermarkets face competition probe

09/03/2006

Supermarkets could face financial penalties after the Office of Fair Trading (OFT) today revealed it will ask the Competition Commission to further investigate the UK's groceries sector.

The market is worth almost £100 billion a year and accounts for 13 per cent of all household spending.

While there is intense competition between leading supermarket chains, the OFT has concluded that there is significant enough grounds for a Competition Commission inquiry.

This follows pressure from consumer groups and smaller retailers who have expressed concern about the expansion of supermarkets into the convenience store sector.

In a statement issued today the regulator raised concerns about the control large supermarkets have over the groceries market.

The OFT said the land held by the leading chains, coupled with the planning laws, could make it difficult for new entrants, while some of their pricing practices could "distort competition".

"Although consumers have benefited from lower prices, the restrictions in the planning system, and the possible incentives those restrictions create for retailers to distort competition, may harm consumers and mean that competition in the market is less than it might otherwise be," said John Fingleton, chief executive of the OFT.

The announcement has been welcomed by small business leaders, with the Federation of Small Businesses (FSB) describing it as "not a moment too soon".

"When supermarkets, convenience stores and branded petrol stations are considered together, there is little doubt that there is a dominant position being taken by the big four supermarkets in the grocery sector," said Carol Undy, FSB national chair.

The OFT will now hold a four-week consultation period ending on April 6th.

© Adfero Ltd