The Office of Fair Trading has recommended that the grocery market be referred to the Competition Commission for a full investigation.
In a report released yesterday, the OFT said that because of the size and importance of the market and the number of concerns raised, it felt that a market investigation of the whole sector by the CC would be the most appropriate way of resolving any issues.
The share prices of the major multiples took a tumble on the news, with shares in Tesco, Sainsbury and Morrisons all falling.
Lucy Neville-Rolfe, Tesco’s group corporate and legal affairs director, said: “We look forward to the debate and a prompt and speedy conclusion. We are confident that once the other observations in the report are explored, the regulators will find that they are misplaced.”
Independent retailers celebrated the announcement, which comes after years of hard work by representatives across the sector, who have claimed the major supermarkets abuse their market position.
David Rae, chief executive of the Association of Convenience Stores, said: “This is a landmark ruling for independents and consumers. The public, parliamentarians and industry experts have been calling for some time for the market to be investigated and we are delighted that the CC have been given the opportunity to take a fresh look at the market.”
However, retail lawyers warned that the investigation, which could take as long as two years, would be a costly experience for all companies involved.
Guy Lougher, national head of the EU Competition Group for Pinsent Masons, said: “The CC will issue retailers and suppliers with a number of detailed questionnaires, with strict timelines to respond. It will be a considerable and costly burden for all companies.”
In a report released yesterday, the OFT said that because of the size and importance of the market and the number of concerns raised, it felt that a market investigation of the whole sector by the CC would be the most appropriate way of resolving any issues.
The share prices of the major multiples took a tumble on the news, with shares in Tesco, Sainsbury and Morrisons all falling.
Lucy Neville-Rolfe, Tesco’s group corporate and legal affairs director, said: “We look forward to the debate and a prompt and speedy conclusion. We are confident that once the other observations in the report are explored, the regulators will find that they are misplaced.”
Independent retailers celebrated the announcement, which comes after years of hard work by representatives across the sector, who have claimed the major supermarkets abuse their market position.
David Rae, chief executive of the Association of Convenience Stores, said: “This is a landmark ruling for independents and consumers. The public, parliamentarians and industry experts have been calling for some time for the market to be investigated and we are delighted that the CC have been given the opportunity to take a fresh look at the market.”
However, retail lawyers warned that the investigation, which could take as long as two years, would be a costly experience for all companies involved.
Guy Lougher, national head of the EU Competition Group for Pinsent Masons, said: “The CC will issue retailers and suppliers with a number of detailed questionnaires, with strict timelines to respond. It will be a considerable and costly burden for all companies.”
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