Grocery market needs more competition, says report

Tesco, the UK’s leading supermarket chain, does not stifle its rivals but more competition is needed in some areas, according to a report by the Competition Commission published today (Wednesday). It may force chains to sell off land in a bid to increase competition in local markets.

The preliminary findings, which follow an 18-month inquiry into the market, also found that in most areas the £128m grocery market offers “a good deal for consumers” with strong competition between retailers.

The Commission says that Tesco, which has a 30% share of the market, is “not in such a strong position” that other retailers cannot compete and that continued expansion by other grocery retailers supports that.

But the report adds, “action is needed to improve competition in a number of local markets”. It also says that small shops with good offerings will continue to prosper despite increased competition from supermarkets although “life will not be easy”.

The Commission has also raised concerns about the relationship between retailers and their suppliers. It is launching a consultation into look into the issue and also into the need for a supermarkets ombudsman.

The report is not final and supermarkets will have the opportunity to respond before the final recommendations are published next March.