Netto UK has told the Competition Commission's groceries inquiry it is wrong not to consider discounters effective competition to the multiple grocers.
In its provisional findings last October, the Commission said the discounters were restrained competitively by the full product grocery range retailers but not vice versa.
But in a submission, Netto MD Richard Lancaster said: "The commission places undue emphasis on range as the sole determinant of competition and does not seek to recognise that price is, in consumers' eyes, even more important. The discounters provide fierce competition on price to the major retailers."
The commission's decision could prove crucial to discounters' expansion plans. If it is decided that more stores are needed in some areas to increase local competition, discounters could be excluded from entry. Lancaster also said Netto believed there was a single grocery market and all stores were to a greater or lesser degree in competition with each other.
Netto would welcome the inclusion of a fascia test for planning decisions for new stores, he said. The test should include all store sizes operated by each fascia and not be segmented into convenience, mid-range and one-stop, he said.
Netto's arguments would appear to have been given weight by Tesco, which this week said it was set to match the price of more than 2,000 products at Aldi and Lidl.
Aldi, meanwhile, has told the commission it should not recommend changes to the Code of Practice nor extend it to all retailers. "Aldi supports a system for supplier relations that is open, transparent and free of over-regulation," it said in a response this week.
"Aldi's offer is virtually 100%-own label and therefore relationships with suppliers are, by necessity, long-term, with both parties sharing in a common goal of increased sales."