Grocery market

 9 May 2006

The OFT has referred the supply of groceries by retailers in the UK to the Competition Commission (CC) for a market investigation.

This decision comes after a period of public consultation, which follows the OFT's earlier proposal to refer the grocery market to the CC on 9 March 2006. During this 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.
 
The evidence compiled 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.

The CC investigation is not limited to considering only the issues that the OFT has identified.

Download The OFT's reasons for making a reference (pdf 520 kb)
See OFT press release
See CC schedule

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