After the war of words over “rip-off” fuel prices, a more placatory tone was struck this week by the Competition & Markets Authority towards supermarkets in its report into food pricing. It wasn’t quite a ringing endorsement, as the CMA told supermarkets off over a range of obfuscatory pricing tactics, in a victory for the long-running Which? campaign. And it also raised questions over the role of loyalty cards. But the supermarkets will nonetheless have been relieved to be absolved on the profiteering front.
But the CMA’s next instalment may reach different conclusions. It will now be looking more closely at the role of suppliers in 10 categories: baby formula, baked beans, bread, chilled desserts, lemonade, mayonnaise, milk, petfood, poultry and ready meals.
Some of these are understandable. The spat between Heinz and Tesco last year makes baked beans an obvious target. Ditto petfood given a similar delisting of Mars petcare products.
On the other hand, it’s difficult to see at first glance how bakeries and poultry operators might be profiteering, given the much-publicised financial woes of leading players. The approach suggests a broadly random sample of categories was chosen, for better or worse.
In the week fertiliser companies were found to have increased profits by 500% over a two-year period, it’s also surprising the CMA hasn’t chosen to look even further upstream to particular ingredients or raw material costs. Maybe that’s an investigation for later. And to be fair, broadening its probe to potentially scores of suppliers and thousands of products is quite an arduous task, with a promised timeframe of “the autumn”.
What’s more, while noting that the likes of Associated British Foods, Mondelez, Unilever and Coca-Cola, as well as Heinz and Mars, make profits up to 15 times higher than some retailers for this “next phase” of its probe, quite what the CMA can do about it – or how it expects to unearth any skeletons in the closet from these goliaths in just a few months – remains a mystery.
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