2 April 1999

Supermarket inquiry results

SUPERMARKETS face the prospect of a Monopolies and Mergers Commission investigation into alleged excessive profit making at the expense of consumers and suppliers.

A nine-month inquiry by the Office of Fair Trading has ended and is thought to have found evidence that the dominance of the big retailers is distorting the market.

The inquiry followed complaints from consumers that they are paying prices well above the European average. Farmers had also long claimed that retailers are failing to pass on low livestock prices to consumers.

John Bridgeman, director-general of the Office of Fair Trading is understood to have written to all the supermarkets to warn then that he intends to refer them to the MMC next month.

While his department remains tight-lipped about the letters exact content it is thought to set out Mr Bridgemans particular concerns which include pricing policies, land valuations and the relationship between supermarkets and their suppliers.

Reply deadline

Supermarket bosses have been given until April 1 to reply to the letter. And the OFT director-general is expected to consider their comments before making a public statement next week.

Although there had been speculation that the OFT was particularly concerned about the dominance of Tesco, Sainsbury, Safeway and Asda it is thought that it will refer the whole food retail industry to the competition authorities and not just "the big four".

Commenting on the rumours, an NFU spokesman said: "We welcome any further inquiry which could give clarity and transparency to the food chain. Farmers have been concerned for some time about the difference between farm-gate prices and retail prices. The NFU will be happy to take part in a more in-depth inquiry if it can."

The National Beef Association has also come out in support of an investigation. But NBA chief executive Robert Forster has warned that it should not concentrate on the issue of retail prices as there is a danger that the damage being done to the supply chain by supermarket practices will be missed.

Supermarkets deny that their profits are excessive and argue that overheads in the UK are higher than in the rest of the EU.