Supermarkets that make use of their business size for forcing down prices are going to get penalised under a proposed plan that seeks to encourage greater competition and thus more choice for consumers. The Competition Commission, it is expected, will recommend changes for discouraging chains from building local monopolies thereby forcing out smaller stores. An ombudsman is proposed for supervising the relationship between Sainsbury’s, Tesco, Morrisons, Asda and their suppliers. The recommendations are followed by a two year inquiry into the grocery sector worth £1.23bn. Figures indicate the supermarkets’ ‘stranglehold’ has forced out many smaller rivals. The four supermarkets account for a nearly 75% market share.
The ombudsman, it is expected, will carry power to penalise firms for sudden and sharp price cuts, and ‘pay-to-stay’ fees for keeping goods on shelves. Large retailers who fail to meet competition standards could face refusal of planning applications. If there is no competition in (certain) local markets, it’s disadvantageous to people in those areas. It also prompts retailers weakening their offer to customers nationally, the commission has stated. Its provisional findings in October had pointed out at least 200 areas where consumers hardly had a choice of shopping. It was also discovered chains were allegedly buying up land to prevent rivals coming up with competing stores.