The Competition Commission is focusing on the wrong aspect of the planning system in its inquiry into the grocery market, according to Asda.
In its response to Emerging Thinking, the retailer says the Commission is placing too much emphasis on the spoiler tactics used by retailers to prevent competitors coming into the area.These include the building of unnecessary extensions and mezzanines.
Asda claims these tactics are simply a result of the needs test, which is used by councils to determine if new retail space is required in an area. This, argues Asda, means the system favours incumbents in local markets and restricts competition and choice.
"Asda is concerned that the Commission appears to have focused on the secondary rather than on the primary issues," says Asda.
"All incumbents understand that their ongoing expansion in local areas tends to reduce the prospect of future competitive entry through the needs test."
Meanwhile, in its response, Waitrose says the Commission is wrong to assert there is no evidence of a waterbed effect, claiming this "does not tally" with its experience. Proponents of the theory say big chains extract disproportionately better prices from suppliers, who in turn ramp up prices to smaller customers.