Findings from the Competition Commission's Inquiry into Supermarkets

Douglas Cooper

Journal of Agricultural Economics, 2003, vol. 54, issue 1, 127-143

Abstract: This paper summarises some of the findings from the Competition Commission's report into supermarkets. First, the paper explains the background to the inquiry. It then presents data showing national and regional concentration, and explores indicators of profitability for the major UK supermarkets, to see if these indicate patterns of excessive profitability. It discusses whether international price comparisons have any role to play in the assessment of the competitiveness of this market. It then addresses pricing issues, particularly: company pricing strategies, evidence on price leading and matching, below‐cost selling, and differential pricing between stores in a chain. The paper then turns to the other main area of the report ‐ supplier relations with supermarkets. A large number of practices were found where supermarkets unreasonably exerted their market power to the detriment of those suppliers and competitors, and because of this the Commission recommended that the OFT should negotiate a code of conduct to govern supermarkets’relations with suppliers. The nature of these practices and the reasons for their being found against the public interest are explained.

Date: 2003
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