Pressure was mounting this week on the OFT to change its approach to grocery retail as one of the most influential names in British industry threw his weight behind calls for the regulator to justify its much-maligned two-market definition of the sector.
Sir Digby Jones, CBI director general, told the Nisa annual conference: “I can’t see why the big retailers’ involvement in your market is totally different to when they bang products out of a hypermarket.
“The OFT have got this completely round their necks. It either needs to be changed or someone needs to explain it in language I can understand.”
Sir Digby said he was not making an anti big retail point - “I don’t mean Tesco can’t come into these communities” - but he felt there were some wider issues at stake than just price and that the OFT had not taken them into account.
One of the key talking points of the Nisa conference was the OFT’s two-market definition and its decision to ignore calls for a market review. Nisa bosses pledged that they would step up their efforts to persuade the regulators to change their views.
But Sir Terry Leahy, Tesco’s chief executive, said successive inquiries had found no cause to alter the two-market approach: “The competition authorities’ test is to take each market on its merits and satisfy themselves it works in consumers’ interests.”
Sir Terry said it was now up to consumers to decide how big a share it grabbed of the c-store sector, where he admitted that Tesco’s share had reached “about 7%” for the first time.
It looks set to keep on growing: Tesco is nearing the end of its One Stop conversion programme and plans more stores under the fascia through acquisition; the 600th Express opens next month.
Sir Terry’s broadside coincides with moves to force a judicial review of the OFT’s processes.
The Grocer understands that the board of the Association of Convenience Stores will next week discuss whether to lodge an appeal with the Competition Appeal Tribunal over the way it believes the OFT mishandled its recent consultation into the state of competition in the market. Any appeal would have to be made by October 5.
The ACS has already written to OFT chairman Sir John Vickers slamming the “defective process” during the consultation process. In the letter, ACS chief executive David Rae criticises the OFT’s “bland assertion” that competition in grocery retailing is working well for consumers.
As The Grocer went to press, the ACS was using yesterday’s deadline for challenging Tesco’s acquisition of 30 Safeway forecourts to call on the OFT to block the deal, which it says would restrict consumer choice through “creeping acquisition”.
John Murphy, of the FWD, said that it had also registered a complaint and was urging the OFT to change its position on the two-market definition.
The Grocer News Team