23 September 1998
‘UK supermarkets rip off customers’ — OFT
By FWi staff
CLAIMS that supermarkets provide value for money for their customers have been rejected by a report released today (Wednesday).
The report, published as part of an ongoing Office of Fair Trading inquiry, says supermarkets are increasingly in a position to exercise buyer power.
The report finds supermarket profit margins in the UK are three times higher than in the rest of Europe.
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 comes the day after Tesco unveiled half-year results showing it was making profits of £1 million a day.
Tesco 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.
Bob Parry, president of the Farmers Union of Wales, said that 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.”
The report was carried out by researchers at Loughborough University. Professor 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.”