Timing, it seems, is everything these days, but especially when it comes to announcements from the competition watchdog. 

We first heard the Competition & Markets Authority (CMA) would be probing allegations of “profiteering” by the big supermarkets on the eve of Rishi Sunak’s food industry summit in May.

If it looked like the government wanted to be seen to be doing something to safeguard hard-pressed shoppers, that’s because it undoubtedly was just that.

Today comes the proof, or rather lack of it, with the CMA issuing a report effectively clearing supermarkets of any wrongdoing, even though many argued the verdict was obvious before the short trial began.

Again, though, the timing was important. The release landed on journalists’ desks a day after figures showed food inflation is continuing to fall, albeit much more slowly than politicians would like.

That’s despite the fact that the report had, by all accounts, been ready to roll two weeks ago.

So ministers can go off on their holidays, assured the full might of the competition authority has been used to protect shoppers against an evil which never existed in the first place.

What the next phase of the CMA probe will yield

This may have been a lightning probe, at least by the previous standards of the regulator and its predecessors, but it’s tempting to ask how much in-depth investigation was needed to find out that operating profits in the retail grocery sector, rather than filling supermarkets’ coffers, had actually fallen by 41.5% in 2022/23 compared with the previous year.

Was there really a need for an inquiry to find this publicly available information? Or even the other conclusion, which was that consumers continue to switch to discounters to gain lower prices, suggesting supermarkets were unable to raise prices even if they wanted to.

But credit to the CMA for not trying to extend this any further than it has to. Today’s report may have follow-up threads but, as Tom Smith, a former CMA director and now a competition lawyer at Geradin Partners, tells The Grocer, it’s “as close to a hearty slap on the back as the CMA can give out”.

One of the interesting questions now, though, is whether the next phase of the probe, which will turn the focus on the supply chain, will dredge up anything monumental. Or will it lead to the same unfounded criticism of suppliers as the original probe did retailers – stoked by claims from various politicians?

Whilst it goes into precious little detail, the CMA suggests supermarkets’ bargaining power has been able to keep prices as low as possible with small to medium suppliers, particularly in own label. But the same may not be true when it comes to the big brands.

So was former Tesco chairman John Allan right all along, and is it the big suppliers who have been profiteering?

To tell the truth, there is little in today’s findings to suggest the CMA will uncover any damning findings by the time it reports on this come the autumn – even if it is now the turn of suppliers to “open their books”.

Likewise, while they will no doubt prefer to not be hauled before the CMA, suppliers in the 10 “indicative” categories targeted by the watchdog for a more detailed look at competition within different sectors, will probably not lose much sleep given today’s report.

The CMA is watching, should retailers use inflation to ramp up prices

Andrew Taylor, a former senior director at the Competition Commission and now partner at Aldwych Partners, says the CMA itself is limited in what it could do even if it does find some profit margins among the big brands, or in some of the highlighted sectors, are higher than it would like.

“I would be surprised if there was anything particularly conclusive in terms of evidence,” he says. “Moreover, it is not clear to me what the CMA would do if it found that, say, profit margins on mayonnaise had increased significantly and there was not much competition on supply. There is not much by way of an obvious remedy.”

The message the CMA seemingly wants to put out today is that it is watching – and if any of those in the food and drink sector thought they could use the turn from inflation to deflation as a good excuse to ramp up their end of year numbers, they should think again.

Once more, it’s tempting to ask how this will achieve anything that would not come out in the negotiation room as retailers and suppliers lock horns over exactly the same issue.

Tesco’s major range reset, which kicked off this week and saw many of the grocery brands it deals with urged to drop their prices, is likely to be more of a test of where the balance of power lies.

One thing’s for sure: there will be no holding place for anyone on either side looking to take a fast one in those talks. The economic backdrop makes sure of that.

And it is that economic reality which is most likely to protect consumers, rather than any politically motivated intervention from the powers that be.