The Competition Commission was today attacked for “going nowhere near far enough” in tackling the dominance of Britain’s biggest supermarkets as it unveiled the findings of a two-year investigation into the sector.

The Association of Convenience Stores said that despite calls from the watchdog for a new planning test and tougher supplier code of conduct, nothing had been proposed that would curb supermarket power.

Shane Brennan, ACS public affairs manager, said: “The Competition Commission has gone nowhere near far enough in addressing the problems in the market place. It's a massive missed opportunity.

“It has failed to deal with the problems and we now have no choice but to talk to ministers and government directly. The fight goes on.”

The Competition Commission investigation is the third into the £120 billion supermarket sector in the past decade and is thought to have cost taxpayers more than £4 million. It has left supermarkets with an estimated £50 million legal bill over the past two years.

In stark contrast to consumer watchdogs furious over Tesco’s relentless expansion in the grocery sector, Peter Freeman, Competition Commission chairman, said that in many respects consumers were “receiving the benefits of competition” across the UK.

The new planning ‘test’ will mean that supermarkets are only able to open new stores in towns and cities where they have an existing market share of less than 60 per cent.

The Commission has also called for the creation of a new, independent ombudsman to arbiter disputes between supermarkets and their suppliers and to enforce a tougher code of practice. Mr Freeman insisted that from the Commission's research, it did not believe that small stores were in terminal decline.

However the ACS said that the planning test would not prevent supermarkets from opening their own convenience stores.

It added that the ombudsman could only work if suppliers are brave enough to come forward.

Despite the apparent clean bill of health on the supermarket sector, Andy Bond, Asda chief executive, said that the creation of an ombudsman could force up the price of food by triggering “hundreds of millions of pounds” of extra costs.

He said: “It's clear that supermarkets like Asda deliver a good deal for their customers, and after yet another exhaustive investigation the CC has again reached the same conclusion.

"While we welcome its proposals to improve local competition, and improve the relationship between retailers and suppliers, the bottom line is that any changes to how the market works must help us to lower prices and deliver an even better deal for customers.

"The CC’s proposals on the new code and an ombudsman could cost the industry hundreds of millions, leading to higher prices for customers which will hit families hard at a time when they are already feeling the pinch.

"We strongly believe that the ombudsman should act as a mediator to resolve disputes rather than diving straight into binding arbitration, and should remain focused on the interests of the consumer.

"We look forward to discussing the precise remit with the CC so that we end up with an ombudsman who promotes effective competition, doesn’t dampen it."

The Commission's final report comes after the launch of another price-fixing investigation by the Office of Fair Trading into the groceries sector. It is believed to be investigating whether supermarkets and some of the biggest consumer goods companies in the world colluded to push up the price of everyday items such as Anadin Extra, Dove shampoo and Aquafresh.

Mr Freeman said that although the Commission had deemed the market to be "generally competitive", it did not mean that other abuses may not occur, and that "it is quite right that such allegations are thoroughly investigated".

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