Commission calls for supermarket ‘shake-up’

Measures designed to boost competitiveness in the grocery sector and improve consumer choice have been unveiled by the industry watchdog.

Proposed changes include the introduction of a new ‘competition test’ that would be applied when making planning decisions for larger stores. Action will also be taken to prevent land agreements restricting competitors from entering the market.

The recommendations follow a two-year probe by the Competition Commission into concerns that supermarkets hold an unfair monopoly in many UK towns, consequently forcing smaller stores out of business.

‘Although, in many areas, there is good choice and strong competition between retailers, there are also a significant number of local areas where larger grocery stores face limited competition and local shoppers lose out,’ the report said.

The reformed code of practice, which will apply to grocery retailers with a turnover of more than £1 billion, is to be regulated by a new supermarket ombudsman.

The ombudsman will resolve complaints made by suppliers against supermarkets and, according to the Competition Commission, should have the power to ‘levy significant financial penalties’ on retailers that do not comply with their findings.