The two supermarkets are keen to defend their own positions after Tesco’s company secretary, Lucy Neville-Rolfe, responded to APPSSG questions on predatory pricing, the alleged flouting of planning consent and dominance in the market place.
chairman Jim Dowd MP was unable to hear evidence from Asda and Waitrose at the final hearing this week, he said he would meet their representatives separately. Tuesday’s hearing was devoted to the Office of Fair Trading. New chief executive John Fingleton stressed that it was the OFT’s job to protect competition, not competitors, and said: “Difficulty for individual groups of competitors does not necessarily equal damage to competition or mean consumers are worse off.”
Fingleton’s comments that a heavy discount voucher scheme run by Tesco against independent trader Proudfoot was not predatory pricing sparked a reaction from the Association of Convenience Stores. A spokesman said: “Unlike Mr Fingleton, we believe that using an aggressive 40% across the board discount to target an independent retailer, as in the Withernsea case, was predatory.”
Fingleton said the OFT would make a decision on whether to refer the grocery market to the Competition Commission in six months’ time.
The OFT received further criticism this week from the National Audit Office for costly, complex and time-consuming investigations. According to the NAO study, six of the OFT’s 37 investigations at last April exceeded three years. Meanwhile, the OFT has admitted that Tesco’s massive land bank of undeveloped sites gives it an edge over competitors. The admission was buried in the OFT’s ruling to permit Tesco’s acquisition of 21 former BP/Safeway forecourt stores.
However, as such sites were not yet active, the OFT said they should not be taken into account when addressing third party concerns over Tesco’s market power. The deal has angered local politicians in Exmouth in Devon, who claim it has left Tesco with a monopoly. Tesco will close its existing Tesco Express store in the town on November 29 before opening the former BP/Safeway store as a Tesco Express the next day.
Fiona McLelland & Ronan Hegarty