25 September 1998

Supermarket good value claim rejected

CLAIMS that supermarkets provide value for money for their customers have been rejected in a report from the ongoing Office of Fair Trading inquiry.

It says supermarkets are increasingly in a position to exercise buyer power, and the inquiry has found that the retailers profit margins in the UK are three times higher than supermarkets on the Continent.

But the report also rejects the need for legislation to control prices, and says complaints should be dealt with on a case-by-case basis. "Blanket regulatory intervention against discounts to large buyers is more likely to inhibit than stimulate the competitive process," the report says.

The news came the day after Tesco unveiled half-year results showing it was making profits of £1m a day.

The firm maintains that the final stage of the OFT inquiry, due to be completed by Christmas, will confirm that it is highly competitive and has its customers interests at heart.

But Bob Parry, president of the Farmers Union of Wales, said the report proved what farmers had been saying for years. "The supermarket giants are using their enormous power in the retail market to force farmers to accept less and less," he said. "Farmers are getting a pittance for their animals."

And an NFU spokeswoman added that farmers continued to see a growing gap between farmgate and retail prices and found it hard to understand why, when, for example, pigmeat prices had fallen by 50% in two years, that had not been passed on.

Paul Dobson, one of the reports authors, said: "Consumers in Britain may feel they are ripped off by supermarkets, since when they go abroad they can observe much lower prices. They must question why that is so." &#42