Speculation has spiralled over recent months that the inquiry, led by Competition Commission chairman Peter Freeman, will this month signal its intentions to make hard-line recommendations when it concludes its inquiry in the first half of next year.
Some industry experts suggest that the commission could recommend sweeping changes, including forcing Tesco to give up some of its landbank sites on which it does not trade, reforming the controversial Supermarkets Code of Practice, and imposing restrictions on supermarkets opening further stores in locations where they have strong representation already.
However, a more likely scenario is that it may issue stern words on numerous issues, such as the treatment of suppliers, but it is harder to envisage it introducing draconian measures to arrest the progression of the big four.
This is partly because there is little, if any, concrete evidence that the combined market share of the big four supermarkets, amounting to about 70 per cent (Tesco's 31.7 per cent, Asda’s 16.8 per cent, Sainsbury’s 15.8 per cent, Morrisons' 10.9 per cent) has harmed UK consumers – particularly in terms of the price, quality and choice of products available, which is after all one of the key areas the inquiry is investigating. In its Emerging Thinking document published in January, the commission said that, since 2000, grocery sales have soared 17 per cent, but the real price of food has declined 7 per cent. There may be many suppliers feeling the pinch, but the grocery sector has served the UK consumer well over the past seven years.
Regarding Tesco’s so-called landbank, it would be a surprise if the commission was to attempt to punish the world’s third-biggest retailer by forcing it to hand over property acquired by the letter of the law. Obviously, some – possibly tinged with envy – have criticised Tesco's methods and its flexing of financial muscles, but the reality is that its property team has simply outperformed rivals, which have admitted to taking their eye off the ball, over the past decade.
Of course, the commission could have a few surprises up its sleeve and Tesco, or the other big three, may receive a nasty taste of things to come later this month. But the smart money is on the commission thumping its chest, but not landing any hard punches. With a general election possibly looming in 2009, would the Government really want to blot its so-called pro-business copybook next year and open itself to criticism by meddling in the machinery of one of the world’s most competitive grocery sectors?
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