Is it time for the supermarkets to bite back?

The Competition Commission's (CC) final report on competition in the grocery market has been published today, following a three-year investigation. The verdict is largely a clean bill of health for the supermarket chains.

But in the same week, the Office of Fair Trading (OFT) signalled a further crack-down on major supermarket chains and retailers, following a series of dawn raids. The CC's conclusions follow the unprecedented settlement by the OFT for inappropriate corporate publications regarding alleged milk-price fixing at W.M. Morrison. Is it now time for the supermarkets to bite back?

Antitrust partner Bernardine Adkins says, "The OFT investigation is at odds with the CC's conclusions. Although the CC identifies some areas for concern, its report concludes that competition remains stable in the marketplace. The mood of the supermarkets will be emboldened by these findings. On the back of the Morrison debacle, will they be prepared to take the OFT's investigation into household products and groceries lying down?"

The CC admits that in many important respects, competition in the UK groceries industry is effective and delivers good outcomes for consumers. Despite concern over Tesco and Sainsbury's expansion into convenience stores, the CC has not found these anti-competitive claims to be substantiated.

Recommendations to maintain healthy competition include a competition test in the planning decisions for proposed new stores or extensions – currently, existing large grocery retailers with substantial experience of the planning system are in a better position to absorb planning permission costs and risk.

The CC has also suggested that action be taken to prevent land agreements which restrict competitors entering into the grocery market, so grocery retailers will no longer be able to prevent land being used by their competitors. However, this is only applicable in certain highly-concentrated local markets.

Additional recommendations include the extension and reinforcement of the Groceries Supply Code of Practice and an Ombudsman to oversee compliance with the Code.

Bernardine adds, "While the CC's findings are good news, this is eclipsed by the OFT investigation. Supermarkets and retailers must increasingly be feeling they are subject to a schizophrenic regime."