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Government response to groceries market investigation

DEPARTMENT FOR BUSINESS, ENTERPRISE AND REGULATORY REFORM News Release (2008/156) issued by The Government News Network on 29 July 2008

The Government has today published its response to the Competition Commission's (CC) inquiry into UK groceries retailing.

The CC concluded that in many respects UK retailers are delivering a good deal for consumers, but action was needed to improve competition in local markets and to improve relationships between retailers and their suppliers.

The CC has the powers to implement the majority of the measures it identified, but put the following recommendations to Government:

- Introduce a 'competition test' in planning decisions on larger grocery stores - The Government will reflect further on this recommendation following the CLG consultation on revisions to town centre planning policy and the conclusion of the legal challenge launched by TESCO on 30 June. It does not want to prejudge the outcome of this appeal

- Take action to prevent land agreements which can restrict entry by competitors;

- The Government will consult on this later this year
- Establish an independent Ombudsman to oversee a strengthened Groceries Supply Code of Practice (if the CC cannot get voluntary agreement)

- The Government notes that the CC will engage with large grocery retailers to implement this recommendation. If it cannot get agreement the Government will consider establishing the ombudsman itself. The Government would make any assessment based primarily on what would be in consumers' best interests

Consumer Affairs Minister, Gareth Thomas said:

"I thank the Competition Commission for such an extensive and thorough investigation. Many of the measures they have identified will benefit consumers and I hope that they can implement them quickly.

"Further work, dialogue and consultation will take place on the recommendations put to Government."

Notes for editors

1. Under the Enterprise Act 2002 the OFT can make a market investigation reference to the CC if it has reasonable grounds for suspecting that competition is not working effectively in that market.

2. The grocery market was referred by the OFT on 9 May 2006. This followed an initial OFT study into the sector and public consultation.

3. The CC published its final report on 30 April 2008.

4. The Department for Business, Enterprise and Regulatory Reform is responsible for co-ordinating the Government response to CC market studies.

5. Further information on the CC, its procedures and this particular investigation can be obtained from its website at: http://www.competition-commission.org.uk

6. The Department for Business Enterprise and Regulatory Reform helps UK business succeed in an increasingly competitive world. It promotes business growth and a strong enterprise economy, leads the better regulation agenda and champions free and fair markets. It is the shareholder in a number of Government-owned assets and it works to secure, clean and competitively priced energy supplies

Department for Business, Enterprise & Regulatory Reform
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