Sarah Butler
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Tesco tried to railroad the Competition Commission into considering the broadest possible definition of the grocery market yesterday after failing to persuade the regulator to accept its arguments in a document expected to be released next week.
Britain’s biggest supermarket released a 28-page document arguing that the UK grocery market should be considered as one national market and that “local” should mean as much as a 30-minute drive from a store.
The release came after the supermarket’s failure, over weeks of discussions, to persuade the Competition Commission to accept such a broad market definition in its own working paper, which is expected to be released next week. That document is likely to stick to the commission’s historic definition of local markets as within a ten to fifteen-minute drive from a store.
Rival retailers and competition experts dismissed as “ridiculous” Tesco’s argument that shoppers would be prepared to drive half an hour to find a store with prices 5 per cent cheaper. They said that only a tiny proportion of consumers would consider such a journey.
One competition expert said: “This document smacks of desperation by Tesco. If they couldn’t agree something behind closed doors, going public is not likely to sway the commission.”
Tesco also argued that their large stores were competitively restricted by small shops, because a “significant proportion” of shoppers spent more than 60 per cent of their weekly budget in Tesco Express or Sainsbury’s Local stores.
Discount retailers, such as Aldi and Lidl, as well as internet stores, which account for a tiny percentage of total sales, should also be included as competitors, Tesco argued.
The regulator is considering whether it should alter the way in which it assesses local markets beyond a split between “one-stop shops” and convenience top-up shopping. Previously it has argued that large stores act as a competitive restraint on smaller stores, not the other way round, and it is considering the competitive role of medium-sized stores.
However, the Competition Commission is thought unlikely to move significantly away from its market definitions in the forthcoming working paper.
Tesco said: “Our tests in themselves don’t prove the market is national, but disproves the idea of the ten-minute market.” It argues that it sets prices and strategy nationally and so this is the way that regulators should consider the market.
Tesco wants to move the regulators away from close consideration of competition in local markets because its strong presence in many postcode areas, for example, might lead to it having to divest stores or being prevented from making future acquisitions.
Do supermarkets check out?
May 2006 The Office of Fair Trading asks the Competition Commission to investigate the power of the supermarkets
June Outlines scope of inquiry
January 2007 Reveals first findings from evidence presented by retailers and interested parties
June To release provisional findings
July To reveal potential actions against supermarkets
November Final report due
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Don't support the multinationals
Support local and keep it that way ,if that happened then LOCAL ecconomy would flourish once again.
I strongly say we have an escalating problem.
Stephen, jockland;-), scotland
Tesco like "a cancer"!! Talk about ridiculous hyperbole. If you don't like supermarkets, shop elsewhere. I have been to two towns this weekend where there was a local butcher right next to a Tesco Express. The reason? People still use the butcher for meat and Tesco for other goods. Blaming a business for trying to expand and improve its profit is ludicrous. If people shop in local stores rather than Tesco, they stay open. Simple really, but maybe too simple for some people who seek to blame Tesco rather than look at themselves.
Nick, London,
The regulator certainly needs to do something to the supermarket shopping landscape. Perhaps limit these big supermarket chain to a certain number of stores each - one-stop and top-up stores separately. I can see this as a way to stir up competition.
arctanck, Reading, UK
You have to wonder if the marketing people at Tesco ever actually listen to what they're saying? If they do, it can only be a case of 'say this or lose your job' when it comes to the self-serving assertion that a 30-minute drive constitutes a 'local' store. Add that to the well-documented, morally-corrupt methodology that the company widely employs and you have an institution that has grown to big for the collective good. Every little helps? I hope the Competition Commission can manage to see through the spin and does something to reign in this behemoth before Tescoland brings retail England to its knees.
Julian Buckley, Twickenham, UK
I only shop at Tesco because our other local supermarket, a Sainsbury, is more expensive, has more restrictive opening times, parking is harder and it's too small so has even more restricted choice than Tesco. By local I mean within 5 or 10 minutes drive. If I was willing to drive for 15-30 minutes I could choose from a large Sainsbury, Asda or Morrison - all of which I'd prefer to shop at if I could be bothered driving that far.
Richard, Leatherhead, UK
If we want to avoid living in a homogenous country where all towns and cities are identical we need to apply public, media and politcal pressure to ensure competition is fair. Tescos versus an independent retailer is not fair and will only end up in the supermarketisation of retailing - druding up and down souless, flourescent lit ailes dumping overpackaged generic items into our trolleys. I use the map on www.food-mag.co.uk for a list of independent retailers in Devon and Cornwall - give them your business and not the supermarkets.
Nick, Barnstaple, Devon
Profiteering by the supermarkets is destroying our farming industry and local shops. Between the major supermarkets as liittle as possible is paid to the producers, the excuse being the producers have to be competitive. Meanwhile their mark-up is significantly higher, lining shareholders pockets. I would like to see them pay more of their profit back to the food producers and stop being so greedy. Why do we need a Tesco store every 30minutes drive across the UK? All the major supermarkets are monopolistic and need reigning-in.
David Thijm, Storubridge, UK
Tesco's may be greedy, but so are we. The only reason the local shops are closing down is because we don't shop in them, so they don't make any profit. Why do we go to Tesco's? Because it is cheaper and more convenient. If you want the small shops to survive, start using them!
matthew Brown, Reading, UK
This is ridiculous. Imagine how long those of use without cars would have to travel on public transport to make the same journey. Tesco really needs to be reined in, it holds too powerful a position among retailers and is now trying to reduce competition so it can shaft consumers.
Iain, London,
In North Wales many people have to travel for 30 minutes or more to shop at a supermarket so it quite logical for Tesco to make this sratement. We travel 7 miles to shop at Tesco evan though we have other supermarkets including a Tesco much closer,but thats our choice. 15 years ago we would make a round trip of 24 miles to shop at Sainsbury today the trip to a Sainsbury would be the same in that time Tesco has opened two stores closer to us and the prices are cheaper.
Dave, Mold, Flintshire
"Local" should be a measure of distance. The fact that we're discussing "local" as a measure of drive time just shows how obsessed everyone is with their cars. Get out of your car and walk / cycle to the shops, then you'll know what "local" is.
Re the closure of small local shops, this is hardly Tesco's fault. Its fault of the general public who insist on being able to get everything in one shop and being able to drive to it.
You have the option of supporting your local small shops. If you don't spend your money in them, then you can't complain when they close.
Duncan, Crawley, UK
Even if I had a car I wouldn't drive half an hour each way just to go to the supermarket.
Dave Hinton, London, England
I make a point of driving for 30 minutes past Tesco's and the other large supermarkets. I buy all my produce on local farms, including chickens which are raised right on the farm where I buy them too. We need to support our farmers, not huge faceless business's such as supermarkets.
James, Reading,
For once I tend to agree with Tesco! Where I live you need to drive for at least 25 mins. to get to a farmshop etc.
H.D, W.s.Mare, England
The business of Tesco is to make as big a profit as possible and so give their shareholder the best possible return on their investment. It is not to sell food or clothes or phones it is just to make a profit. They are not a social service, do not expect them to be. They will do anything to maximise profits, as should all businesses, of course they would like a monopoly. It is down to legislators to curb this and to make sure that the comunity, be that local or national does not lose out.
Tesco are doing what they can to put pressure on the legislature the public should then pressure back, in this way you come to a deal that sort of works for everyone. This is business. As a consumer and someone that lives in a freeish market economy this is something you must learn to deal with.
John, London, UK
All planning decisions should involve at least one person who does not have a car. Millions of people are dependent upon public transport. A thirty minute drive takes far longer for them.
David Gwilliam , Leicester, England
Tesco is like a Cancer, festering in towns all over britain,destroying the character of communities and driving thousands of people out of business.They are out of control.
Michael Rigby, Chorley, Lancs, England
30 mins drive recommended - is that so they can sell people more petroI? I bet they'd be less enthusiastic to publish their environmental policy!!
I have seen a Tesco store completely ruin a couple of small towns/villages, resulting in closure of 3 butcher's shops, 2 greengrocers, and two bakers. Newsagents takings have plummeted. The village 'community' has ceased to exist - where people once chatted in local shops, they now plough round a store the size of a football pitch not speaking to anyone. It is a disgrace. There is one word to describe the policy of supermarkets in the 21st century and that is GREED!!!
This month will see me cancel my car insurance with Tesco out of priciple.
Anderson Coleman, Freckleton, Lancashire
Sounds fair enough to me - living in central London, a 30 minute drive takes me about half a mile down the road...
Discount stores like Lidl should be included as competitors, because people do substitute them for Tesco / Sainsbury's etc. when a discount store opens closer by.
Frankie, London, UK
Might be all right if you have access to a car but the same journey on a bus with a walking stick and two shopping bags would be a marathon.
Doug, Durham, UK
It seems Tesco are suffering the fate of extremely successful companies, success leads to bareface arrogance initially such arrogance is targeted towards competition, then it spreads to towards regulation then employees and finally towards their customers.
Rasheed, Edgware, UK
At the end of the day, all Tesco's wants to do is take over the country and will use any bully-boy tactics to do so...we the consumers and the competeition commission have the opportunity to stop the further growth (and hopefully) decrease the number of Tesco towns so we can have a choice of places to shop...and if Tesco's doesn't like it...then tough!
Tom Walton, Stockton-on-Tees, UK
A 30 minute drive in Cambridge rush hour (for example) can cover 3-4 miles . . . That is certainly local!
Catriona, WGC, UK
Tescos' the new Cancer that, left unchecked will consume us all... when there is no choice left, they will do as they like.... wait and see.
Graham Palfrey, Littlehampton,
How can Tesco now say they set prices etc nationally when every time they are accused of undercutting existing stores when new tesco sites open they quote that local pricing is standard business practice. Cake and eat it? To define local as a 30 minute drive is ludicrous. Living in a relatively small rural city a 30 minute drive takes me into another county, to at least three other market towns and there is no way anyone would do that to pick up a loaf of bread or a pint of milk. They will not be satisfied until they become a total monopoly. And another thing, how pleased are their shareholders with the mission statement outside stores "helping our customers spend less each day"! really!! Do they think we are stupid?
Rick Anker, Lincoln,
Even here in America, where the supermarket was born, no-one would consider a thirty minute drive "local". In Los Angeles, local means within a five to ten minute drive and possibly within walking distance. We too have sustained an amalgamation of supermarkets and there is no longer the competition there once was, but nevertheless, the branches of the remaining companies are always within a ten minute drive of my home and of each other. I have lived in Reading, and the only stores there are Waitrose, Tesco and Sainsburys - but none of them close to each other to make competition meaningful. For Tesco to say that a thirty minute drive is acceptable is quite ridiculous - what one might save at the check-out one would probably lose in petrol!
David Cunard, Los Angeles, USA