The bell for last orders has rung. Yesterday was the deadline for final submissions in response to the Competition Commission's provisional findings. The ACS and the FWD remain furious about the commission's assessment that
c-store numbers are not in decline and have presented fresh data they claim is more credible than the Experian Goad data cited in the provisional findings.
But will their last-ditch attempt to get the commission to change its mind work?
Responding to the commission's demand for fresh evidence only, the ACS and FWD have now submitted new figures based on Verdict research that show a decline in c-store numbers. The evidence backs up data from IGD/Knowledge Store that they argue the commission should have used in the first place instead of the Experian Goad data, which looks at only the entry and exit of stores in town centres.
FWD members have also given the commission new details of how many retail customers they had in 2000 - the date of the previous full groceries inquiry - and how many they have now.
The commission needs to face up to the facts, they argue. "The decline in c-store numbers is something wholesalers consider to be a truth, and is a fact they use to develop their business plans," says John Murphy, FWD director general. James Lowman, ACS chief executive, adds: "We're just trying to demonstrate what everyone else knows is happening."
If it doesn't accept this, it is unlikely to concede that a differential in the prices wholesalers and supermarkets pay for goods is putting independents out of business either - the fundamental line of argument being pursued by the ACS and FWD.
In its provisional findings, the commission acknowledged that wholesalers paid up to 16% more than supermarkets for groceries. But this was due to retailers buying larger volumes and it was not possible to say it harmed shoppers, it claimed.
However, c-stores and wholesalers believe volume-related savings should amount to a differential of no more than 0.5%-1%. Anything over that is the result of buyer power, they argue. This creates a waterbed effect, whereby suppliers charge small buyers more to offset the discounts they have to give big customers - causing independents to close and reducing consumer choice. The task is to convince the commission that the multiples' excessive buying power is causing the decline in c-store numbers.
Whether it should reassess its
c-store data is not the only question the commission needs to address before it publishes its final report next February. The debate continues to rage over the merits of introducing an ombudsman to oversee a beefed up Supermarkets Code of Practice.
Th is has so far provided one of the only real fillips for small retailers. Their reasoning is simple. Empowering suppliers could help reduce the differentials between what wholesalers and big retailers pay for goods.
That said, a proposal to extend it to all buyers, including independents and wholesalers, has caused some consternation.
Such a move could distract attention from the real problem, says Lowman. "If a supplier is selling to a company with 40% of the market who is doing things wrong, let's call them x, y and z, and is also selling to a company with 5% of the market who is merely doing x, it may be that the supplier feels more comfortable reporting the smaller customer whose business he can perhaps afford to lose, but not the larger one," he explains.
"This means you could end up focusing the remedy on something that was not really the problem in the first place."
Wholesalers are also against applying the code to smaller retailers and symbol groups because it would add cost to their operations, though there are potential upsides, says Murphy.
"My members are likely to be happier being covered by a code that ensures transparency in pricing," he says.
Another concern for c-stores is the prospect of a relaxation of the planning regime, which could re-open the door to out-of-town supermarkets (see boxout).
With so much at stake, it is no surprise that neither the ACS nor the FWD is giving up yet - despite widespread suspicions that the content of the commission's final report is a foregone conclusion.
They will now have to wait three long months to find out whether their desperate scramble to get to the bar in the commission's last chance saloon has worked.n
The independents are worried that the commission will recommend a relaxation of the planning regime. In its response to the commission's proposed remedies, posted this week on the commission's website, the ACS has vehemently objected to any relaxation, arguing it would lead to more out-of-town supermarket developments.
"Any remedy adopted should not simply see competition as purely existing between the big four, but give appropriate weight to the importance of a mix of retail provisions for customers," it says. "The most undesirable outcome of any remedy would be a relaxation of planning law to allow an upsurge in supermarket builds and the further market consolidation of the big four."
The ACS cites commission statistics showing that two new multiple supermarkets have been built every week over the past seven years compared with just one by an independent. This, it says, shows that for independent retailers there are already significant barriers to entry and expansion that are not related to the availability of sites.
There is no need to abandon the needs test, it adds, pointing out that Asda failed to provide any examples of a store that had been refused planning permission solely on grounds of failing the test. A competition test measuring a retailer's local market share before allowing it to open a new store in the area should only be introduced as part of "a balance of considerations" for planners.