The Groceries Market Investigation 2008.ppt

The Groceries Market Investigation 2008 Carole Begent Deputy Chief Legal Adviser Competition Commission IDRC, Kyoto 13 April 2008 Background to the Reference OFT referred Grocery Market to CC on 9 May 2006 The OFT said the following was suspected of distorting competition: Planning system—by raising costs and limiting scope of local market entry, particularly for new large format stores Land holdings of big supermarkets reinforcing existing market position Pricing behaviour of big supermarkets through below cost selling and price flexing Buyer power of big supermarkets undermining the viability of alternative business models (e.g. wholesale distribution and convenience store sector) and harming consumer choice Key steps of Investigation Issues statement June 2006 Emerging thinking January 2007 Provisional findings October 2007 Provisional decision on Remedies February 2008 Final report to be published by 8 May 2008 Market Investigations — The Test “whether a feature or features of the market prevents restricts or distorts competition” “Features”: structure or conduct (of grocery retailer or customers) Investigation was focused on possible harm to the consumer The Groceries Market Sales by big supermarkets – 80% of annual sales (2006) Largest 4 Grocery retailers – 70% of annual sales Since 1990s – development of out of town stores Sainsburys and Tesco move into convenience stores Decline in independent convenience stores and specialist stores Overall the number of convenience stores has not declined in recent years Some entry – ‘LADS’ Groceries Market Investigation — other issues Damage to environment – transport of goods and by customers, excessive packaging and shopping bags Social impact – emptying the high street and threat to communities Health – cheap alcohol encourages binge drinking and alcoholism Strategic – security of UK food suppliers The Groceries Investigation — the CC Six Commissioners – the decision takers Staff – up to 30 s