Commission Identifies 13% Superstore Buying Advantage
11 Jul 2007
The Association of Convenience Stores (ACS), the campaigning voice of over 33,000 local shops, has welcomed the findings of new Competition Commission working papers, which show a significant change in the Commission’s thinking since the publication of its Emerging Thinking.
ACS Chief Executive James Lowman said: “On the crucial issue of buying prices, the Commission is at last making progress. The superstores achieving preferential terms of up to 13% should be a massive concern for all of us who promote a level playing field in the grocery industry.
“There is still work to be done to ascertain if buyers purchasing the same goods, at the same time and in the same volume, get the same prices and terms regardless of their size, but at last we seem to be moving in the right direction. We will continue to lead this fight for fairness in the market.”
The Commission’s findings follow their previous papers confirming that anti-competitive supermarket practices are still commonplace.
Mr Lowman continued: “These practices continue despite being found to be detrimental to competition seven years ago. It is now obvious that we need a much more effective Supermarket Code of Practice, pro-actively enforced to ensure that anti-competitive practices are stopped.”
The Competition Commission’s paper on the entry and exit of stores in local markets, however, causes concern for ACS, and reveals elementary flaws in the methods still being used by the Commission. This paper draws on data from the Experian-Goad database which maps retail developments in town centres and retail parks only.
Mr Lowman commented. “This working papers show that in town centres there has been a huge decline in the number of specialist stores such as butchers, bakers and fishmongers, this is a trend that is of enormous public concern and is clearly against consumers’ interests.
“Unfortunately, when it comes to studying the openings and closures of convenience stores, the Experian-Goad data is so limited as to be useless. We do not understand why in this paper the Commission has not said what the total number of convenience stores covered by the database are, we strongly suspect that tens of thousands of convenience stores are ignored by the data collection methods. This is because it does not cover the neighbourhood areas and villages where most convenience stores trade, and indeed our own interrogation of this database show it to be pointless as a tool for understanding our market.”
“We would be very concerned if the Commission was to draw conclusions about the state of the convenience market from this data.”
Mr Lowman also explained that ACS had responded to the Commission’s latest view on the waterbed effect.
“The waterbed debate remains extremely contentious in the academic community. We have responded in detail to the technical concerns raised in the Commissions working paper. It remains our view that supplier discrimination takes place in the grocery market and it is a result of the distorting effect of the overwhelmingly dominant position of the 4 biggest retailers.
“The central argument of the waterbed effect theory is that the dominant position of the Big 4 leads to buying price differentials which in turn harm consumers, this is increasingly well supported by the evidence gathered by the Commission and by ACS.”
ACS will be formally responding to the Commission’s working papers as a matter of urgency.
Contact:
Shane Brennan Public Affairs and Communications Manager
ACS
01252 515001 / 07921 372978
Rachel Lawson Communications Co-ordinator
ACS
01252 515001
ACS Chief Executive James Lowman said: “On the crucial issue of buying prices, the Commission is at last making progress. The superstores achieving preferential terms of up to 13% should be a massive concern for all of us who promote a level playing field in the grocery industry.
“There is still work to be done to ascertain if buyers purchasing the same goods, at the same time and in the same volume, get the same prices and terms regardless of their size, but at last we seem to be moving in the right direction. We will continue to lead this fight for fairness in the market.”
The Commission’s findings follow their previous papers confirming that anti-competitive supermarket practices are still commonplace.
Mr Lowman continued: “These practices continue despite being found to be detrimental to competition seven years ago. It is now obvious that we need a much more effective Supermarket Code of Practice, pro-actively enforced to ensure that anti-competitive practices are stopped.”
The Competition Commission’s paper on the entry and exit of stores in local markets, however, causes concern for ACS, and reveals elementary flaws in the methods still being used by the Commission. This paper draws on data from the Experian-Goad database which maps retail developments in town centres and retail parks only.
Mr Lowman commented. “This working papers show that in town centres there has been a huge decline in the number of specialist stores such as butchers, bakers and fishmongers, this is a trend that is of enormous public concern and is clearly against consumers’ interests.
“Unfortunately, when it comes to studying the openings and closures of convenience stores, the Experian-Goad data is so limited as to be useless. We do not understand why in this paper the Commission has not said what the total number of convenience stores covered by the database are, we strongly suspect that tens of thousands of convenience stores are ignored by the data collection methods. This is because it does not cover the neighbourhood areas and villages where most convenience stores trade, and indeed our own interrogation of this database show it to be pointless as a tool for understanding our market.”
“We would be very concerned if the Commission was to draw conclusions about the state of the convenience market from this data.”
Mr Lowman also explained that ACS had responded to the Commission’s latest view on the waterbed effect.
“The waterbed debate remains extremely contentious in the academic community. We have responded in detail to the technical concerns raised in the Commissions working paper. It remains our view that supplier discrimination takes place in the grocery market and it is a result of the distorting effect of the overwhelmingly dominant position of the 4 biggest retailers.
“The central argument of the waterbed effect theory is that the dominant position of the Big 4 leads to buying price differentials which in turn harm consumers, this is increasingly well supported by the evidence gathered by the Commission and by ACS.”
ACS will be formally responding to the Commission’s working papers as a matter of urgency.
Contact:
Shane Brennan Public Affairs and Communications Manager
ACS
01252 515001 / 07921 372978
Rachel Lawson Communications Co-ordinator
ACS
01252 515001