>>retailers should be careful what they wish for


The OFT’s decision to refer the entire grocery market to the Competition Commission is surprising for many reasons. First, of course, is the fact that the regulator seems to have performed a dramatic U-turn on many of the issues identified in its report. Readers will remember OFT chief John Fingleton telling readers of The Grocer that his organisation was there to protect consumers, not companies that felt they had an historic right to be in business - like “candlemakers when electricity came in”.
He also played down calls for planning law to be changed and was pretty ambivalent about many of the issues of buying power and pricing behaviour. On the last point, when we tackled him about the now infamous 40% discount offered by Tesco in Withernsea, where it was competing with family chain Proudfoot, Fingleton was unmoved: “We decided it was not predatory pricing and have been vindicated. Mr Proudfoot is still in business and consumers are getting better prices.”
Well, Mr Proudfoot is now featured in the OFT report as part of its body of evidence to suggest that there are issues around buying power and pricing behaviour. The report also says the Commission should take a closer look at the planning system and developments in the c-store sector. All very strange, don’t you think?
What’s even stranger than this incredible volte face is the fact that the OFT has decided to refer the entire market, not just the biggest retailers with the most clout (as it surely should). But as Fingleton says in our news story, you should always be careful what you wish for.
And while some of you may be whooping it up and thinking it will be worth getting involved in an inquiry, I would urge caution, because I remember the headaches the 2000 inquiry caused smaller supermarket chains (the big ones weren’t too happy either).
There’s another issue: will a new inquiry change anything? I fear not. Sure, the referral is to be welcomed as it will clear the air on many issues. But I think it will be another waste of time and money. Why? Simple: five years ago, the Competition Commission had plenty to say about planning, buying and pricing issues - and not very much was done, despite its extensive (and expensive) research and a shopping list of ideas. Worse, that inquiry paved the way for the disastrous ‘two markets’ definition of grocery. Makes you think, doesn’t it?
OFT: just for the big boys?