Tesco to appeal Competition Commission’s findings

Posted by Daniel Palmer on 1st July 2008

Tesco has launched a legal challenge to one of the remedies recommended by the Competition Commission in its latest inquiry into the grocery sector.

Like the ACCC, the competition watchdog in the UK recently carried out an inquiry into the state of competition in the grocery industry. The UK inquiry was undertaken due to concerns that the four largest retailers (Tesco, Asda, Sainsbury’s and Morrisons) may have too much influence in the marketplace. This concern was based on the fact that 76% of the market is held by these four companies, whereas the Australian inquiry was in response to fears that two retailers may have too much market power with up to 80% of the market (according to the ACCC).

The Competition Commission established that while UK competition was strong there were concerns that the strength of the major retailers may have some detrimental impact on consumers.

Tesco has lodged its application with the Competition Appeal Tribunal (CAT), to challenge the Commission’s proposal to introduce a ‘competition assessment’ into the UK planning system.

Tesco’s Corporate and Legal Affairs Director, Lucy Neville-Rolfe, indicates that it is only one of the findings and recommendations that has concerned the UK’s largest retailer. “We are pleased that once again, the Commission has found that the groceries sector is broadly competitive and delivers a good deal for customers,” she said. “We are appealing on just one aspect of the final report and remedies.”

One of the main points in the judicial review is that Tesco claim the competition test does not remedy the adverse effect on competition identified by the Commission. “The competition test would not address the planning barrier identified,” Ms Neville-Rolfe added. “Perversely, it would introduce another barrier into the planning process. The bureaucracy involved would increase delays and costs – and could even jeopardise long term regeneration schemes – at a time when Tesco is working hard to keep prices low for customers.”

“Planning decisions should be taken by local people who understand what their community needs, and it is a matter of principle to Tesco that customers, not regulators, should decide where we shop,” Ms Neville-Rolfe concluded.

The ACCC is due to announce their findings into the Australian grocery industry at the end of this month and more stringent changes to legislation are anticipated to be recommended by the ACCC.