The CC is to focus its attention on local markets across the UK as the next stage in its investigation into the market for the supply of groceries. In its emerging thinking document the CC summarises the evidence gathered so far in areas such as the supply chain, planning and land banks and outlines its next steps in the inquiry.

Supply chain

  • Economic viability of food and drink manufacturers and wholesalers (and hence that of the supply chain to smaller retailers) as a whole is not in question.
  • No clear evidence that supermarket buyer power is reducing supplier innovation.
  • Assessment of primary producers has, to date, focused on those two sectors where most concerns raised with us—dairy farming and pig meat.
  • The number of dairy and pig meat farmers has declined in recent years indicating significant difficulties in those sectors. Average incomes are now rising but supermarkets are retaining an increasing share of the retail price for milk (the situation is less clear for pig meat). We will be looking at this further as well as other primary produce sectors.
  • At the moment we see no clear correlation between the size of buyers (measured by share of national retail sales) and better buying terms.
  • Many general assertions made about the activities of and the power held by supermarkets but less specific evidence than might have been expected. Not clear that this is all down to ‘fear factor’, given our comprehensive procedures to deal with this. Picture so far of supply chain practices is varied and not always bad for the consumer.

Land and planning

  • Investigation has concentrated on finding out the facts about supermarkets’ land holdings, their purpose and how the planning systems affect retailer development.
  • This shows that Tesco holds most land, but other retailers are actively increasing their holdings also. Implications of this will now be considered as part of the analysis of competition between retailers.
  • Conflicting evidence on effect of planning controls; some say they are too restrictive, others that they are not restrictive enough.

Retailer competition

  • Will concentrate on this over the next few months. Having collected comprehensive data on who owns and does what and where, this will be analysed in detail, bringing in land and planning aspects also.
  • The main focus will be on local areas (i.e. are prices higher in some areas than others? Is quality lower in some areas than others and what might be causing this?).
  • Evidence of below-cost selling and price flexing by retailers. We will assess the effects on smaller retailers as part of the analysis of local areas and following up individual cases reported to us.