Campaigners against the power of the multiples should concentrate on attacking Britain's stifling planning laws if they want to bring about change in the grocery market, the head of the OFT has hinted.
In an exclusive interview with The Grocer, OFT chief executive John Fingleton, who last week revealed plans to refer the market to the Competition Commission, suggested that highlighting faults with the planning system may be the only realistic way of reining in the power of the major supermarket multiples.
And he stood by the OFT's controversial stance that all other areas of the market were working largely in favour of consumers and competition.
Fingleton denied that the OFT's proposal to refer the market for scrutiny by the CC was an embarrassing U-turn for the competition watchdog.
He insisted the decision to call for possible referral had not been prompted by arguments over predatory pricing and c-store closures but by new revelations last year over the multiples' land banks and claims they were barring competitors from entering new markets.
"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," said Fingleton.
"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."
According to the OFT's outline referral document, information supplied by the big four suggests that they own a total of 319 sites that have not yet been developed for retail.
In addition, a further 149 sites have been identified where there is "some form of conditional contract or option" on land, subject to planning approval being granted.
The OFT is concerned by the multiples' failure to use the sites, of which 149 are in town centres, and it suspects they are merely holding on to land to stop rivals grabbing more of the market.
Tesco's share of the total land bank has not been disclosed in the OFT's document but is believed to be sizeable. In addition, Fingleton said current planning laws were a major concern and a key plank of the decision to propose a referral.
"No one could enter the market on a big scale because of the planning regulations," he added. "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."
Simon Mowbray