Competition inquiry could force a giant supermarket land sale

[OpenMind]

Competition inquiry could force a giant supermarket land sale





By Rosie Murray-West, Business Correspondent

Last Updated: 7:16am GMT 23/01/2007

Supermarkets could be forced to sell land and alter their relationships with suppliers after the Competition Commission reports its first findings on Britain's grocery market today.

The commission is investigating whether Britain has become a "supermarket state", with thousands of local specialist stores being killed off by big supermarkets moving into the convenience store sector. This could eventually limit choice and push up prices for customers, critics believe.



An "emerging thinking" report today will give the first indications of whether the commission will attempt to break the power of the "Big Four" supermarkets by outlawing "bully boy" tactics and promoting fairer pricing.

"It is an absolute certainty that the report will discuss land ownership and the relationship between supermarkets and their suppliers," said Jonathan Pritchard, a retail analyst at Oriel Securities.

The "Big Four" – Tesco, Sainsbury's, Asda and Morrisons – are believed to have spent tens of millions of pounds on lawyers and consultants to fight accusations that their dominance is hurting consumers.

Tesco has even set up a special website to try and refute some of the claims made by suppliers, MPs and members of the public in written responses to the Competition Commission inquiry.

Tesco is the focus of concerns about supermarket power, because it takes £1 in every £8 spent in the high street. Critics say it has gained an effective monopoly in a number of communities, and it is opening small convenience outlets at the rate of two a week.

The investigation is also looking at the expansion of Asda, Sainsbury's and Morrisons. If it believes that there is a problem, the commission has the power to impose planning restrictions on all four supermarkets, and could force them to sell land they have earmarked for new stores. It could also outlaw the practice of "price flexing", where supermarkets sell staple items such as bread, baked beans and bananas at below cost-price in certain areas of the country, in order to entice customers away from rivals.

In submissions to the Competition Commission, an independent body, some food suppliers and farmers said they were afraid of the supermarkets, who use their power to drive prices down to unsustainable levels. The National Farmers Union complained of a "climate of fear and oppression" for some suppliers, and of an abuse of power by supermarkets.

Mark Tinsley, a farmer who supplies major supermarkets, said vegetable packers and processors will not pay extra for British produce in times of shortage because they are afraid of the supermarkets, resulting in supermarkets paying half the price of imported products for UK vegetables.

Consumer groups have also complained about the supermarket practice of holding banks of land for development, supposedly to prevent rival supermarkets from building near their existing stores. Tesco denies that it is sitting on a vast land bank.

The "emerging thinking" report will outline the progress that has been made by the commission. The next stage is a provisional findings report that is due in June.

Tesco to build homes

Tesco, Britain's biggest retailer, is planning to build more than 2.000 homes in the next three years. The supermarket is waiting for the green light for its biggest project yet, in Woolwich, south-east London. This could include 960 homes as well as a large Tesco store. Plans include 698 luxury apartments, ranging from one- to three-bedroom penthouses. The rest will be low-cost housing. Tesco has said that building homes helps to make new store developments commercially viable, particularly in poorer areas.

Copyright of Telegraph Media Group Limited 2007.





As per usual, this is far too late to stop the damage. This will simply end in the consumer paying more. Pensioners will be particulary hard hit by this.

I find irony in Tesco's plans to build homes for people around their stores. I wonder if there will be a clause with each home making the owner/leaseholder use Tesco's for their purchases.:rolleyes: