Backlash Against Tesco Competition Commission Appeal

In its appeal, Tesco argues that the competition test does not remedy the adverse effect on competition identified by the commission, with the company’s corporate and legal affairs director, Lucy Neville-Rolfe, saying, “We are pleased that once again the commission has found that the groceries sector is broadly competitive and delivers a good deal for customers. We are appealing on just one aspect of the final report and remedies.

“The competition test would not address the planning barrier identified. Perversely, it would introduce another barrier into the planning process. The bureaucracy involved would increase delays and costs - and could even jeopardise long term regeneration schemes - at a time when Tesco is working hard to keep prices low for customers.”

She adds, “Planning decisions should be taken by local people who understand what their community needs, and it is a matter of principle to Tesco that customers, not regulators, should decide where we shop.”

However, industry associations have hit back at the Tesco’s appeal, with Ken Parsons, chief executive of the Rural Shops Alliance saying, “You do not need a roomful of economists and a supercomputer to realise that it is not in the interests of anyone – consumers, the grocery trade or even Tesco themselves – to allow their current market dominance to extend still further. Their appeal smacks of an arrogance that we would not have expected from such a professional company. They should accept that the Competition Commission report is a far better outcome for them than they might have feared, understand that there has to be a limit to the market share that one company can be allowed to achieve in the UK grocery market and put their considerable energies into achieving further growth abroad.”

With The Competition Commission report and suggested remedies doing little to acknowledge the difficulties facing smaller independent stores, this latest news has just exasabated the situation. 

ACS chief executive, James Lowman, said, “Tesco’s appeal should be seen as an attempt to delay and subvert the outcome of the Inquiry. The Competition test is a timid remedy that would have almost no impact on the encroaching dominance of Tesco in all but a handful of places where they already have in excess of a colossal 60% market share.

“Tesco’s desire to quash even this indicates how divorced they have become from what is in the best long term interests of consumers. This is a stark indication that they will stop at nothing to stamp out choice in local markets.”

The Planning Competition Test remedy was made by the Competition Commission as a recommendation to Government. The proposal was put forward as a remedy in markets where the Commission concluded that ‘consumers get a poorer retail offer in terms of prices, quality and service than would otherwise be the case, while those grocery retailers with strong local market positions earn additional profits due to weak competition in those markets.

This appeal will affect ongoing work by the Department for Communities and Local Government who are looking at this alongside further reform of town centre first planning policy. This appeal threatens to slow down the policy making process further and could be viewed as a spoiling tactic.