Having been making our case on competition in grocery publicly for years, we are very glad that the Competition Commission has finally given us the chance to better understand what arguments the major supermarkets are making.
There is much to digest and we will be able to respond to the Commission's inquiry on the points they raise. In particular your report highlights Tesco's decision to define grocery as "one market". We see in its comments a reflection of the extent to which we have moved on from the unhelpful two-markets debate.
We believe the two-markets definition was simplistic and thoroughly unhelpful. We also believe that this led, in part, to the inadequate scrutiny of major acquisitions such as that of T&S Stores in 2002. However, our aims in working with this inquiry are not solely about changing the competition authorities' definition of the grocery market.
It is vitally important that when it reaches its conclusions, the Commission is able to convince the industry that it has a definition that is credible and robust. However, if it achieves only this it would have failed, not least because in the submissions of the supermarkets there is much more for them to investigate.
We highlight Morrisons' admission that it engages in below-cost selling. It states that it does so only because of pressures of competition, but also crucially because "other prices in our stores are higher than they would be if we did not sell products at a loss to remain competitive".
This shows not only that below-cost selling damages competition, but that it harms customers who cannot access the lowest prices on goods. The Commission concluded this was a concern in its report in 2000. The ACS will make the case that the authorities cannot leave this problem unaddressed.
It is our firm view, backed by increasing evidence, that the big four have excessive buyer and seller power and that, for consumers' benefit and the promotion of effective competition, the resulting abuses need curbing.