Bob Surridge, MD of Anglian Convenience Stores, said: “I am pleased that the OFT has finally done something, even if it could be too little too late.”
He was pleased that the suggested investigation would be a comprehensive review of the entire industry. “This has been long overdue, in fact I believe the OFT has been negligent in taking this long to get around to it,”
The ACS claimed that the OFT move was a recognition of the evidence it presented along with other lobby groups and vindicated its legal challenge to the OFT’s rejection of calls for a full market investigation. Chief executive David Rae said: “This is a landmark ruling for independent retailers and consumers. The industry is one we all use and rely on, and it is absolutely right the authorities take a long hard look.”
Wholesalers were also celebrating. FWD director general John Murphy said that the referral was unexpected and it was the best result it could have hoped for. He stated that wholesalers would not be worried by a full market review and confirmed that wholesalers had been offering to open their books for some time.
Murphy pointed out: “The Competition Commission looked at prices in 2000, but these had been mainly reported by suppliers. A look at wholesalers’ accounts might show some different insights.”
Steve Parfett, managing director of cash and carry operator AG Parfett and Sons, said: “We’ve been campaigning against organisations that have huge resources trying to prove that there is no case to answer. A lot of the hard work has been done to get to this stage, but now we will have to do our level best to show the authorities that there is a major issue that needs to be addressed.”
THAT TWO-MARKET DEFINITION!
The OFT now admits changes in the c-store sector may have altered the landscape. But its report muddies the water by claiming both supermarkets moving into c-stores and the growth of symbol groups have resulted in lower prices. This “may have been at the expense of store choice at local level”.
There are worries that multiple “buyer power” has increased, with “evidence that the differential between prices to supermarkets compared with those to wholesalers and buying groups has risen. This buyer power may harm choice for consumer by undermining viability of alternative business models including wholesale distribution to c-stores.”
The current planning system “creates barriers to entry, primarily for new large format stores”. There are particular fears that the major multiples are using land banks to “reinforce their position”. The OFT also found evidence of “restrictive covenants” being placed on sites sold by the major multiples.
Debates over targeted voucher schemes and price flexing played a big part in the APPSG’s report, but the OFT is not convinced shoppers are the losers. Despite it asking for supermarket pricing behaviour to be looked at it says “…we cannot conclude, on the basis of the evidence we collected, that consumers are harmed”.