The OFT carried out a public consultation, which followed an earlier proposal by the Office to refer the grocery market to the Competition Commission (CC). During the consultation period, more than 1,200 responses were received from businesses, consumers and other interested parties, the majority of whom supported the OFT's decision. Having considered the views of respondents to the consultation, the OFT has concluded that there are a number of competition concerns that warrant a full investigation by the CC.
Reasons for reference
Date of reference: 9 May 2006.
The OFT has referred the Grocery market to the CC for investigation. Evidence complied by the OFT suggests that:
the planning regime acts as a costly barrier to entry, making it difficult for new stores to open and compete with those already in the market
big supermarkets have significant land holdings which could aggravate barriers to entry or otherwise harm consumers
in some instances, supermarkets have attached restrictive covenants when selling sites
there is also evidence to suggest that the big supermarkets' buyer power has increased, and that some aspects of their pricing behaviour
such as below-cost selling and price flexing - could distort competition