The Competition Commission on Supermarkets

Is here a problem with competition between the supermarket chains? Why, yes, there is.

And what is the cause of that problem?

The planning regime (in particular, PPS6 in England, SPP8 in Scotland, PPS5 in Northern Ireland and MIPPS 02/2005 in Wales), and the manner in which the planning regime is applied by Local Planning Authorities, acts as a barrier to entry or expansion in a significant number of local markets: (i) by limiting construction of new larger grocery stores on out-of-centre or edge-of-centre sites; and (ii) by imposing costs and risks on smaller retailers and entrants without pre-existing grocery retail operations in the UK that are not borne to the same extent by existing national-level grocery retailers. (c) The control of land in highly-concentrated local markets by incumbent retailers acts as a barrier to entry, by limiting entrants’ access to potential sites for new larger grocery stores.

c) is of course the result of the supermarkets gaming the current planning system. Elsewhere they note that the vast majority of the "landbank" sites are not being used to control access to the market. This is something that I\’ve been saying for some time now: given the time it takes to get planning permission it would be logical for the chains to have sites that they were in the process of developing. They identify 886 sites in the landbanks and almost all of these (all except 110) are indeed in the normal process of development.

Essentially, although they don\’t say this explicitly, if you want to have more competition in retailing, you\’ve got to actually allow more competition in retailing: the planning system has to allow competitors to open stores.

Against this background, our investigation has sought to establish whether UK grocery retailing is competitive, as that seems to us to offer the best guarantee that consumers will be able to exercise their own judgement as to what grocery retail offer they prefer. If consumer preferences change, retailers in a competitive market must alter their offering or lose customers, market share and profit. We prefer, therefore, to seek, so far as possible, to empower the consumer rather than to impose on the consumer our own judgement of what the grocery retailing offer should be.

Quite. You don\’t like what\’s on offer? Spend your money elsewhere. Nice to see good sense breaking out, eh?

Ah, I\’d missed this lot.

Andrew Simms, at the think tank New Economics Foundation and the author of Tescopoly, said: "Some of the Competition Commission’s proposals come straight out of Alice in Wonderland. They are so perverse that, instead of doing the job they were given, which was to break the stranglehold of the big four supermarkets over British shoppers and producers, they propose measures that will tighten their grip."

Cretin. The Competition Commission first found out that there was no such stranglehold. It\’s still a comptetive market. Second, they found that the limitation on competition was the ability of people to open stores and that, where this was not possible perhaps the planning system should be changed (they muse on this rather than baldly state it) to enable further competition.

Clive Davenport, at the Federation of Small Businesses, said: "The Competition Commission has consistently failed to be an effective regulator to the retail industry. Three time-consuming, costly and ultimately meaningless inquiries in just seven years tell their own story."

Moron. Three enquiries in seven years have found that there is no monopoly or oligopoly that is exploiting the consumer. Thus they are being an effective regulator.

12 thoughts on “The Competition Commission on Supermarkets”

  1. So is the CC an effective regulator, as now, or a bunch of ignorant poujadistes as in your post from yesterday?

    Tim adds: Yesterday was a comment on what the newspaper said that the report would recommend. Today is actually reading the report (not available yesterday). Facts change, I change my mind. Pray, what do you do sir?

  2. Perhaps I should have made it clearer that I’m cheering on Tim’s manifestation of today.

    The succession of competition policy reports on the state of the grocery market in Britain are the outcome of the regulatory succumbing to continuing media pressures stoked by rivals and the disgruntled.

    In fact, the market is thoroughly dynamic – Tesco wasn’t top dog in the early 1990s, Sainsbury’s was, and Asda was well behind in market share but is now second. At the time, some commentators were saying that Asda really didn’t understand consumers in the south of England. In recent years, Waitrose has been doing spectacularly well as a consequence of a policy to buy up stores disposed of by Somerfield and former Safeway stores from Morrison and then by merchandising its own brand of high-quality foods which compete mainly with the Sainbury’s and M&S brands.

    It isn’t the fault of the supermarket chains if shoppers prefer the convenience, quality and prices of the supermarkets to shopping in independent stores. I’m fortunate in that where I live I can get by public transport to Asda, Morrison, Sainbury or Tesco stores without too much trouble so it’s matter of shopping around for where I can get the best selections of merchandise, quality and prices.

  3. “It isn’t the fault of the supermarket chains if shoppers prefer the convenience, quality and prices of the supermarkets to shopping in independent stores.”

    More to the point, no-one forces people to shop in supermarkets. It’s democracy: a daily vote by millions of people, with minority rights protected (those opposed to the horrors of bottled water, cheap lager, inorganic chicken get to not buy those things).

    Curiously, though, when I try to buy more than 10 paracetamol, all the supermarkets refuse to sell me them. How is it that they all fail to respond to consumer demand?

  4. “when I try to buy more than 10 paracetamol, all the supermarkets refuse to sell me them. How is it that they all fail to respond to consumer demand?”

    Government edict. To stop impulse suicides, I believe.

    Because obviously, potential suicides are too dumb to just shop around until they have what they need…

    Tough luck on the poor lady ahead of me in the queue at Christmas who couldn’t buy 2 different packets of paracetomol tablets, some hot lemon drinks and cough mixture because she was ‘over the limit’. Her pleading that her family all had colds didn’t move the cashier – ‘rules are rules’.

    So she gave me the money, I bought half the stuff for her, and we both made our feelings known to the cashier 😉

  5. “Government edict.”

    Actually, I did know why. I too have been inconvenienced. In fact, I wonder if deaths due to higher blood pressure from this stupid edict outweigh the temporary reduction in deaths from suicidal people not determined enough to shop around.

    Over on another thread on this blog, we’ve been lectured by a statist apologist that the time remaining to suicide victims is “priceless” and that any time we spend inventing ways around Government edicts is “worth it”.

  6. Worth reading this account of Asda’s lobbying for a change in the planning regime to counter Tesco’s “dominance” of the UK grocery market:
    http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/02/16/ccom116.xml

    The report in the Telegraph concludes that: “it is now time for Asda to start competing and stop lobbying.”

    I’m a bit puzzled by the claim made here above that there’s a bar against supermarkets selling packets containing more than 10 tablets of paracetamol at a time to one customer, which I will need to check out. The fact is that today I bought a packet of 32 Co-codamol tablets (a standard mix of paracetamol and codeine) in a Tesco supermarket and each of these tablets is definitely more potent than a tablet of paracetamol alone. To allay any hopes or worries, I’ve no suicidal intentions.

  7. “The fact is that today I bought a packet of 32 Co-codamol tablets (a standard mix of paracetamol and codeine) in a Tesco supermarket and each of these tablets is definitely more potent than a tablet of paracetamol alone.”

    Perhaps a codeine/paracetamol mix is exempt from the regulations? The ways of Government are indeed inscrutable.

  8. There’s perhaps a moderately interesting background about how I got to know about Co-codamol. I was initially prescribed these tablets by my GP for “lower back pain”, which I occasionally get bouts of at infrequent but unpredictable intervals and which can be excruciating. What’s more, it can prevent sleep and cause much turning in bed trying to find comfortable positions to minimise the pain and that exacerbates the problem.

    It’s a popular complaint, so popular that in my area GPs are forbidden from sending patients to hospital for treatment other than physiotherapy, which isn’t very effective in my case, to judge from long past experience. The only remaining alternative is painkillers, hence the prescription for Co-codamol, which does stop the pain and allows resting, which ultimately alleviates the problem until next time.

    In fact, Co-codamol is available over the counter in pharmacies without prescription although sales staff generally ask questions such as: “Have you had these tablets before?” since the tablets are quite potent. There is a Boots equivalent but that is about twice as expensive as Co-codamol in Tescos with pharmacies. The sensible way of taking Co-codamol when necessary is to take only one tablet every 4 hours – which is half the maximum dose but that is often sufficient.

    Btw I have absolutely no medical qualifications (or pretentions) and this account only reflects personal experience.

  9. Pingback: Mark Kleinman on the Competition Commission Report

  10. “Perhaps a codeine/paracetamol mix is exempt from the regulations? “

    You know what else is exempt from the regulations?

    Boot sales. There’s a stall at my local one that will sell you as much paracetomol (packaged, in date) as you desire 🙂

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