Inquiry has failed to land punches on grocers

Given that the Commission spent two years conducting 700 submissions and 81 hearings for the inquiry, which is estimated to have cost retailers tens of millions of pounds, it was a fair question.

Freeman said: “I don’t do deflation.” However, the truth is that whatever Freeman thinks most of the grocery sector believes that, as far as damp squibs go, the final report was an extremely damp affair.

On numerous issues, the Commission gave the sector a clean bill of health. Freeman and his colleagues found no evidence that big grocers are preventing smaller independents from growing and dismissed predatory pricing. It also identified that while restrictive covenants and exclusivity agreements can act as barriers to entry, it was only proposing the removal of 60 such contracts – a paltry number, given that the big four grocers have more than 3,500 UK stores between them.

Furthermore, if a big retailer appeals against any of the inquiry’s findings, the appeals process could drag on for years.

Above all, doubts have emerged as to whether two key pillars of the inquiry – the competition test and the ombudsman – will ever see the light of day.

As we report in today’s Retail Week, the Government and the Office of Fair Trading are reluctant to take responsibility for the competition test, which will apply to stores bigger than 1,000 sq m and is designed to give consumers more choice in local areas.

Both the Department for Communities and Local Government (DCLG) – which is responsible for planning – and the OFT have expressed serious reservations about the proposals. A DCLG spokesman said: “It would be a significant departure from how things work at the moment.”

Another potential body blow is that inquiry panel member Professor Bruce Lyons has dissented over whether the ombudsman would help consumers. In the report, the Commission said: “He believed that the ombudsman would be counterproductive and strongly preferred rapid, independent arbitration of disputes combined with OFT compliance monitoring.

“In his view, the ombudsman would not be able to preserve anonymity when dealing with complaints and he was concerned that the German experience was also that complaint investigation revealed identities.”
In fairness to Freeman, he has delivered some tough words on retrospective pricing and the transfer of risk to suppliers, such as passing on the cost of stolen items.

Freeman told Retail Week that the Commission identified a “high proportion” of both practices. On retrospective pricing, he said: “We did itemise how many of the complaints we looked at specifically covered risk transfer or retrospective and the proportion was quite high.”

The terminology of the new Groceries Supply Code of Practice has been tightened to make it, in theory, easier for suppliers to get their grievances acted upon. However, until an ombudsman is put in place, little is expected to change. And the same applies to a robust competition test.

After another exhaustive inquiry, even Freeman hinted at an element of inquiry fatigue, when he said that a hiatus of five years would be a suitable breathing space for the sector, although he said a decade may be too long. “I think that five years is a good foreseeable future,” he said.

Overall, however, serious doubts remain about whether this inquiry will actually have any discernible impact on the sector inside the next five years.

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