John Fingleton talks to The Grocer about key inquiry issues. Simon Mowbray and Julian Hunt report

John Fingleton, chief executive of the Office of Fair Trading, is in no mood for compromise - despite last week's apparent U-turn in deciding to refer the entire grocery market to the Competition Commission.
In an exclusive interview with The Grocer this week, Fingleton insists that the OFT's decision was based on solid economics, not a response to mounting pressure from trade bodies or MPs. And, as we report on page four, his message is clear: Britain's planning regime is the main reason why he may now be minded to call for a referral at the end of a month-long consultation.
"This office has a record of looking at restrictions on competition when it harms consumers and that appears to be the case on planning," says Fingleton.
"One of the things that people have not picked up on is that ultimately the planning system could be the remedy to a lot of the issues that have been raised. The question of land banks was in the public domain in the latter part of last year and was not raised with us before that. One of the things we have concluded is that it is difficult for new operators to enter the market and that the market is working against efficient entrance. Any planning system that rewards inefficient entrance is inherently suspect and needs to be looked at.
"No one could enter the market on a big scale because of the planning regulations. The planning system as it is would grind you down. That is bad for consumers and that needs to be costed. That is a difficult question and one that needs more analysis."
While Asda and Sainsbury have certainly been talking much more openly about their concerns with the way planning is currently handled, the fact that this issue was apparently news to the OFT is odd.
After all, planning issues featured prominently in the 2000 inquiry by the Competition Commission into the supermarket sector and was touched upon in the subsequent inquiry into the Morrisons takeover.
Way back in 2000, the Competition Commission identified that the planning system was not designed to safeguard competition and consumer choice and it recommended that a small, dedicated unit should be formed within the OFT to approve any proposal from the biggest retailers to open, or acquire, a new store of more than 11,000 sq ft within a 15-minute drive of an existing store or extend a store significantly.
"They did not do that because retailers bleated and said it would be too much red tape," recalls one analyst. "Had that idea been implemented, then things would be very different.
"Instead, Tesco is the only retailer actively in the market for stores. The others have been turning on and then turning off their site purchasing, so is it any surprise that their land banks are empty while Tesco's is full?"
So if not much has really changed on planning, aside from the fact that Tesco has an even bigger land bank in reserve than in 2000, then what new suggestions would another Competition Commission inquiry throw up?
John Stockdale, a director at retail planning consultants CgMs, is one of those left feeling nonplussed by the recent turn of events.
"I am not clear what new evidence there is that suggests there's a need for a fresh look at the whole issue, and I can't really see what would come out of an inquiry that would change anything."
As Stockdale points out, planning is such a politically charged issue that any changes would need to come from government; introducing a system that required planners - or OFT economists - to make value judgements about which retailers were allowed to develop what sites would be madness. "In any case, the Secretary of State can already call in any application that he wants - we don't need a new procedural system to control developments, as it is already there," says Stockdale.
The OFT clearly disagrees that the status quo should be maintained. And in our interview with Fingleton this week, he suggests that planning is more of a problem than the other major issues raised in the OFT's report, such as predatory pricing, convenience store closures and market structure.
As our table below shows, the OFT's research is detailed and highlights a number of points about the current workings of the market, not just related to planning.
Yet Fingleton and his colleagues clearly still need to be completely convinced that on all these issues consumers are being harmed by what's happening. And his words will not be welcomed by those campaigning for change. "Some people would be right to say we are [still] not focused on the issues they wanted - we are not," says a defiant Fingleton.
For instance, he accepts that some suppliers are giving better prices to the multiples than to smaller stores, and are under pressure.
But Fingleton asserts that "suppliers being squeezed is good for consumers", the OFT's number one priority in any decision to refer.
And he adds: "The rebuttal of that requires that something else is going on that harms consumers. At the end of the day, a competitive market is going to involve squeezing suppliers and that is good for consumers."
On the subject of c-store closures, Fingleton also remains unequivocal, pointing to evidence that shows the sector is actually healthier now than it was five years ago when the Competition Commission last reported.
"We have looked at the worries about pricing and so on but we have not found [evidence of] harm to others," says Fingleton. "People can ask us to look again but there is no point if consumers are not being harmed. We are not going to find the answer that those people want."

Ten things you really should know about the grocery retail market as unearthed by Office of Fair Trading analysts
UNDEVELOPED LANDThe major multiples have 319 undeveloped land sites, of which 3% were purchased prior to 1980 and 17% last yearSALES ON THE UP Total sales through UK grocery outlets were about £120bn in 2005, a 4.2% increase on the previous yearEXTRA CONVENIENCE C-stores' £32bn of sales represents a growth of 31% in the past five years compared with a 24% rise for all food retailingSUPERMARKET SHAREThe big four have the same 75% slice of the market that the big five had five years ago, but Tesco's share climbsTESCO DOMINANT The supermarket giant has more than a 50% market share in no fewer than 104 postcode areas at the last countSTORES ARE NEAR Data from an unnamed multiple shows four out of five shoppers live within 15 minutes of three+ supermarketsBELOW-COST SELLINGThe big four retailers sell an estimated 2,708 lines below cost (gross margin less than 5%, according to OFT)SHOPPERS' GOOD DEALAbout 2% of products sold across all grocery retailers are below cost, with drinks the top deal for shoppersSUPERS CHEAPESTBut that average jumps to more than 3% in the supermarkets where sub-5% margins are even more commonPRODUCT NUMBERSMore than 41,000 lines were on sale across the big four supermarkets last year - a rise of 40% from five years ago