The OFT said that following its consultation, there had been a number of competition concerns that warranted a full investigation, including the planning regime, land holdings and buying powers.
Independent retailers celebrated the announcement. David Rae, chief executive of the Association of Convenience Stores, said: “This is a watershed inquiry for our industry. The grocery market needs to be looked at.”
Environmental pressure group Friends of the Earth, which has been campaigning for a supermarket inquiry for some time, added: “Time is ticking for our high streets and farmers. The Competition Commission must start its investigation without delay. Radical solutions are needed to deal with these problems.”
However, Sir Terry Leahy, chief executive of Tesco, said that it was up to the consumer to decide: “We know that up and down the country millions of ordinary consumers vote with their feet when they go shopping. They have a choice and it is one they exercise every day.”
He added: “We will reiterate that the consumer in every walk of life benefits from the choice, value, quality, convenience, range and service that supermarkets like Tesco provide.”
For more details on the OFT's referral, see The Grocer on Saturday.