Underfed watchdog can't boss the fat alleycats

The Competition Commission's supermarkets probe resembles the tendency of top-level football referees in the 1980s to admonish 'robust' tackles with an affectionate pat on the perpetrator's backside. (Except that many football-followers secretly lament the passing of the latter.)

However, nobody should be surprised that the Competition Commission has taken a leaf out of the Geoffrey Howe book of savaging. It is in no position to start throwing its weight around among heavyweights of the FTSE 100.

A regulator with little goodwill among business, government or households cannot start interfering willy-nilly with private business without clear evidence of anti-competitive practice or monopoly power. And if we as consumers are left with a barren landscape of grocery retailing towered over by identikit behemoths – think Monument Valley, Arizona – then it is our own fault.

We - as a nation - voted for the laissez-faire revolution of the 1980s, we voted for successive Chancellors straining to impress on business how supine they and their regulators would be. Moreover, the same nation wanted, and wants, maximum returns on stocks and shares and pensions, and believes big business when they claim that any regulation or interference would be ruinous for UK companies and the economy.

We can't do all that and then expect an underfed 'watchdog' to fly in the face of decades of financial and economic orthodoxy, and start tackling the top cats, because our favourite local butcher has closed down. It is a grand form of 'regulatory capture' – a process recognised after the big privatisations of the 1980s and 90s, when the bodies set up to monitor the private monopolies (Oftel, Ofgas, Ofwat, etc) got too chummy with their wards. The best business deals are done on the golf course, it is said: but stand too close on the ninth tee and you can lose all your teeth.

The only thing that will decrease supermarkets' grip on the grocery and the wider retail sector is if we stop using them. And that, for many people, is totally impractical. This stranglehold is the culmination of the Big Four's business strategy – one that was entirely foreseeable ten or more years ago.

But nobody wanted to do anything about it then: we were under the stock market's spell; our funky retail giants were all part of a resurgent UK economy and even Cool Britannia. 

And now … is it too late? I like to think not, but it will take more than a limp-wristed Competition Commission inquiry to help out our small retailers, that much is obvious. Well not 'more' than perhaps, 'more ingenious' than. We need to think how to boost small retailers and local suppliers.

Unfortunately, the fundamental problem is that the grocery shops just aren't there in most town centres or suburban or rural areas to mount a challenge. There needs to be a great range of shops in a locality to negate the draw of the supermarket: if you've got to go there in the end anyway for half your shopping, you may as well simply get all your shopping there.

'It's not perfect,' most people will admit, 'But I can't spend all day driving around the county when I can get it all in an hour at Tesco, even if I don't particularly like the place.'

- Adrian Lowery, News editor, This is Money

Comments

[Jason Charlesworth]

I'm tempted to suggest that the Commission must have consisted mainly of board members from the Supermarkets in question. Typical whitewash. Next time appoint a team of individuals who can reach a conclusion in the public's interest.

[Barry8]

Local supermarket raised its prices from about mid Dec 2006 over some 6 months by 11% across the board. On my asking why I was told they were adjusting in 'line with Tesco'- two letters to their HQ in Bristol obtained a 'brush off' and now prices are rocketing due to flooding etc but, of course, not through sheer greed. I wish it! Still, it's no more than the banks are doing and all reputable insurance companies. I would have thought we had a government in place to do something. However, they only seem to have forgotten that they are helping developers in building UNAFFORDABLE HOUSING as fast as they can. Where are the planners in all this?
Planning to keep stum! Well we did ask for it.

[Barry8]

Somerfields Supermarket in Calne lifted its prices from December 06 to about May 07 by 11% across the board and seemed also to favour big increases
of perishable fresh fruits. Now they are justifying further increases of most items due to flooding etc (or any other excuse to increase their profits). Their long life milk is priced at 10p a litre MORE than Sainsbury's. And, of course, lots of labels telling us that they are setting their prices by Tesco. So if Tesco is not being honest then it is a sure thing that Somerfields are no better! The competition appears to be by how much more the supermarkets can increase their profits out of all reason. It would seem the Commission is operating with its head in the sand and not really investigating. Do they not eat? Or perhaps do they think?