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Competition Commission Market Investigation - The supply of groceries in the UK

The CC published its final report on 30 April. In general the CC found that the groceries market is generally delivering a good deal for consumers. But it identified two principal areas of concern:

• that several grocery retailers have strong positions in a number of local markets which could lead to a poorer retail offer to the consumer.
• the transfer of excessive risk and unexpected costs to suppliers through practices which the CC believes adversely impact on investment and innovation.

The CC has the powers to implement most of its proposed remedies. However, the CC has made 4 recommendations to government.

It has recommended to Government that a simple and transparent “brightline” Competition Test be adopted and introduced into the planning system to prevent the emergence of highly concentrated local markets in the future and prevent the strengthening of strong local markets in existing areas.

The CC is seeking voluntary undertakings from grocery retailers to establish a groceries supply code of practice (GSCOP) Ombudsman to monitor and enforce compliance with the Code. If the CC fails to obtain satisfactory undertakings from these retailers within a reasonable period of time, Government will be asked to step in and legislate.

The CC has also suggested that DEFRA and BERR look at primary supplier relationships if it subsequently appears that alleged practices continue despite the introduction of the new Code.

It has recommended that BERR amend or repeal the Land Agreements Exclusion Order so that certain agreements can no longer benefit from exclusion from the Competition Act.

The government response was published on 29th July 2008 and can be found as a related document on the right hand side of the page.