Supermarkets: Competition Inquiries into the Groceries Market

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Supermarkets : competition inquiries into the groceries market
Standard Note: SN03653
Last updated: 2 August 2012
Author:
Antony Seely
Business & Transport Section

Over the last two decades, the growing dominance of supermarkets has been a major theme in the nation’s life, seen in eating habits and shopping trends, the architecture of the high street and the look of the countryside. It is undeniable that the vast range of goods and services that supermarkets provide, and the prices at which they supply them, have been terribly successful. However, the growth and profitability of these companies – in particular, the four major chains, Asda, Morrisons, Sainsbury’s and Tesco – has been controversial.
Many critics have argued that the supermarkets have exploited their dominant market position in a way that is contrary to the public interest.
The principal responsibility for enforcing competition law lies with the two independent competition authorities – the Office of Fair Trading (OFT) and the Competition Commission.
In particular, the Commission has the duty to investigate and report on a market on a reference from the OFT, to assess whether competition in that market is prevented, restricted or distorted, and to take any necessary action to remedy, mitigate or prevent those effects. 1
The UK grocery market has been the subject of two major inquiries in recent years. In
October 2000 the Competition Commission completed the first of these enquiries, and it lead to the creation of a Code of Practice, to regulate the relationship between the largest supermarkets and their suppliers. However, the OFT received many complaints that the
Code was not preventing supermarkets exploiting some of their suppliers, and putting many small shops out of business. In May 2006 the OFT referred the market to the Commission for a second time. In April 2008 the Commission completed its inquiry, concluding that in many respects UK grocery retailers were

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