30 Apr 2008


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OFT handed key role in curbing supermarket powers

competition commission

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The Office of Fair Trading (OFT) is to be handed a crucial role in decisions over where new supermarkets can be built, according to the final results of the Competition Commission's two-year inquiry into the UK groceries market, released this morning.

The report also details plans to force the supermarkets to set up an industry ombudsman to police their relationship with suppliers.

The commission said local authorities should be made to consult with the OFT on all applications for planning permission for new grocery stores with more than 1,000sq meters of sales space.

The OFT should also provide advice to planners on whether a retailer has passed or failed a “competition” test.

Applications would pass the test if within the area bounded by a 10-minute drive-time of the development site:

> the grocery retailer that would operate the new store was a new entrant to that area;

> or the total number of fascias in that area was four or more;

> or the total number of fascias in that area was three or fewer and the relevant grocery retailer would operate less than 60% of groceries sales area (including the new store).

Further planning-related measures include:

> Large grocery retailers will be required to scrap 30 restrictive covenants in highly-concentrated local markets that the commission has identified, and any others that were not notified to the CC.

> They may also be required to release any existing restrictive covenants that may restrict grocery retailing in highly concentrated local markets.

> They may be required not to enforce other exclusivity arrangements that could stifle competition

> Large grocery retailers will be required to notify to the OFT all acquisitions of existing stores of more than 1,000sq metres net sales area.

Click on the link to see the full measures laid out by the Competition Commission this morning.

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