Moves to stop local monopoly

The Competition Commission (CC) is to press ahead with plans to prevent multiple retailers from establishing a monopoly in local markets.

The CC has released a report setting out the case for its proposed competition test, which was part of the recommendations made following its two-year investigation into the grocery industry. The test would block supermarket developments by retailers already powerful in a local area, in order to make room for competing stores. It is hoped that a detailed analysis of costs and benefits will satisfy the Competition Appeal Tribunal (CAT), which upheld an appeal by Tesco in March that the CC had failed to sufficiently assess the economic costs, proportionality and effectiveness of the test.

Peter Freeman, chairman of the CC and of the Groceries Inquiry Group, said: "We were asked to prove the case for the competition test and show that it would have the intended effect - to help bring in competition and stop individual retailers consolidating their position in local areas to the detriment of consumers.

"Our analysis has shown the test is likely to have a positive effect over time for consumers, ensuring they benefit from greater competition and choice between retailers in their local areas."

Tesco has reacted angrily to the report, describing the test as a "misguided proposal that will cost jobs by deterring investment in the areas that need it most".

"We are concerned that the CC findings rely heavily on far-fetched assumptions which don't reflect the reality of the planning system," said Tesco's executive director Lucy Neville-Rolfe. "The main effect of the proposed test will be to deter extensions, which will prevent many older stores being updated to provide a better offer for customers up and down the country."