Competition Commission to curb retail dominance

Supermarket chains may be asked to close certain stores and be banned from opening new ones in particular areas as part of the Competition Commission’s investigation into the chains’ alleged excessive power over the grocery sector.

The commission has warned the big five supermarkets – Asda, Safeway, Sainsbury’s, Tesco and northern chain Morrisons – in a letter that they may have to sell stores in certain areas should it find all or any of the chains are acting against the public interest.

The letter also suggests it may order planning officials to restrict permission for the development of certain sites to particular chains. Both moves would aim to combat any regional dominance enjoyed by one or two supermarket companies.

The commission says it could also order the introduction of a code of practice, possibly enforced by the Department of Trade & Industry, to investigate any alleged misdealings with suppliers by the supermarkets.

The measures, which will be discussed with the supermarkets at official hearings in April, would badly hit a sector in the midst of a price war following the arrival of price-cutting US chain Wal-Mart. According to the Office for National Statistics, food prices fell by 1.6 per cent over the 12 months to December, a fall attributed to Wal-Mart’s takeover of Asda in July.

The Competition Commission has announced it will be unable to complete its report on the monopoly reference of the supply of groceries by the original April 7 deadline. It will now aim to complete its report by July 31.