The Competition Commission has given the clearest indication yet that it will recommend an alternative to the much-maligned supermarkets code of practice.

The Commission has published a number of working papers detailing its current thinking on issues such as the code and market definition and confirmed it had received substantially more information from suppliers to help it consider the "waterbed effect".

In its working paper on the supply chain and the code, it concluded that many bad practices by supermarkets found in its 2000 investigation continued. It was these practices that instigated the code.

Also included in the paper was a discussion of the Australian Produce and Grocery Industry Code of Conduct. "We are looking at this," said a spokesman. "It does not seem substantially different but has attracted many more responses so we want to find out why."

Despite calls by Sainsbury's for all significant grocery retailers to be bound by the code, the Commission hinted it was still primarily concerned with retailers holding at least an 8% share of the grocery market. This would mean retailers such as M&S, Waitrose, Aldi and Lidl would remain exempt.

The Commission has also issued a "handful" more Section 109 notices to trade bodies and one supplier, demanding papers relating to complaints falling under the code. Meanwhile, the Commission has stuck to its guns on the issue of market definition, rejecting Tesco's definition of a local market as within a 30-minute drive of a consumer's house. The Commission reaffirmed its

commitment to a model based on a 15-minute drivetime between stores.

"Tesco has sent in its model and the Commission has said no," said ACS public affairs manager Shane Brennan. "Overall we are feeling positive. We are just worried the Commission is a year into its inquiry and is only now starting to get to the bottom of things."needs test may be scrapped

Asda, Sainsbury's and Tesco look like getting their way as the government recommended the removal of controversial "needs test" from the planning process.

This week, in its long-awaited Planning White Paper, the government said it was considering replacing the needs test - which local authorities use to decide if an area requires further grocery retail space. The new test would focus on the 'town centre first' policy and promote competition. The announcement was positive for "edge of" and "out of" centre retail development, said planning consultant CgMs director Steve Wilson.

But he warned: "The industry will need to ensure that what the government proposes to replace these tests with in the summer of 2007 is not potentially more onerous."

The proposals will go out to consultation in the summer.