Protecting the powerful
Campaigners are surprised and even shocked that the Competition Commission has ignored mounting evidence about how the big four supermarkets crush competitors, force local shops to close and squeeze suppliers dry. But they shouldn’t be, because the commission’s primary function is to protect the oligopoly that exists in food retailing, with Tesco’s 30% share of the market (plus £3bn in annual profits) growing by the day.
The commission chose to ignore an unprecedented level of public interest in the investigation, with over 35,000 people writing to express their concern about supermarkets. The 269-page report, the fourth major investigation into supermarket competition since 1999, said small shops had nothing to fear from Tesco and Sainbury's convenience stores. It claimed there was “no adverse effect on competition” from the arrival of hundreds of Tesco Express and Sainsbury's Local stores in neighbourhoods.
It went on to say that small shops “that provide consumers with a strong retail offer will continue to survive and prosper”. Yet statistics show that independent shops are closing at the rate of 2,000 a year and a recent report by the All-Party Parliamentary Small Shops Group estimates that by 2015 “many small shops across the UK will have ceased trading… with few independent businesses taking their place”.
Little surprise then that Tesco’s shares hit an all-time high after the market judged it to have escaped largely unscathed from the investigation. The New Labour government too will be pleased at the commission’s findings. Lord Sainsbury is a major donor to the party while Sir Terence Leahy, Tesco’s chief executive, is a government advisor.
Top of those disappointed by the commission’s report were Friends of the Earth. The two year long investigation into the grocery market was a direct result of a campaign it launched by submitting a proposal for a market study to the Office of Fair Trading, which was subsequently referred to the Competition Commission for a full inquiry. Friends of the Earth's food campaigner, Sandra Bell described yesterday’s report as “a totally inadequate response to the growing power of the big four supermarkets”, and added:
“The Competition Commission acknowledges that supermarkets bully their suppliers and reduce consumer choice, but then bizarrely recommends making it easier for them to expand. Unless urgent action is taken to curb the dominance of the big supermarkets Britain looks set to become an out of town chain store nation." Recent Friends of the Earth research highlighted how dairy farmers are struggling to break even and are unable to invest in greener farming, despite increased consumer demand for more environmentally-friendly produce. This coincided with allegations of dairy price fixing by supermarkets.
Friends of the Earth and others want yet more investigations as a way of curbing the power of the supermarkets. But these will be a complete waste of time. Supermarkets are a prime example of how corporate power has grown over the last 30 years. One of the key features of corporate-driven globalisation is the control of each sector of the economy by fewer and fewer firms. No regulator or government is capable of reversing this process, even if they wanted to, which they clearly don’t. Pressure and protest also count for little against the Tescos of this world. The solution does not lie in fruitless appeals to agencies like the Competition Commission but in campaigning for alternative, not-for-profit ways of owning and controlling food and other industries.
AWTW communications editor
1 November 2007