THE Office of Fair Trading (OFT) will be grilled in court this week over its controversial about-turn last week on supermarket competition.

On Friday the OFT wrote to the Association of Convenience Stores (ACS), indicating that it wanted to reconsider its refusal to investigate the grocery market and the power of Britain’s big four supermarkets — Tesco, J Sainsbury, Asda and Wm Morrison.

The OFT admitted the arguments it had used displayed “insufficient reasoning”.

A review of the decision was due to begin on Tuesday with a case-management conference at the Competition Appeal Tribunal. In a legal first, the ACS is challenging the OFT decision.

But David Greene, the head of litigation at Edwin Coe, who is leading the appeal, insisted this weekend that the ACS would reject the OFT’s offer.

“We will definitely press ahead on Tuesday. If they think it is going to be as simple as that, they are wrong. We will be going ahead,” he said.

“The letter from the OFT came today (Friday) and it was completely out of the blue. It beggars belief that the regulator can say it is withdrawing a finding because it lacks reasoning. We will not go along with any retreat. We will be making a lot of noise.”

Pushing on with its appeal is a high-risk move by the ACS, which could be left with a large legal bill, although a Competition Appeal Tribunal could prove deeply embarrassing for the OFT.

ACS members were infuriated in August when the OFT rejected their demand for a market study on the grounds that the supermarket groups “used methods to build up their businesses in the convenience-store market with which they cannot compete and which are killing off the independents”.

David Rae, the ACS chief executive, said at the time: “Our evidence to the OFT showed that consumers are concerned at the unchecked growth of the major multiples at the expense of the independent shops. We demonstrated that buying power was distorting the market, undermining competition and leading to consumer detriment.”

The OFT has been widely criticised for clearing Tesco, Britain’s largest supermarket chain, to buy a string of convenience-store chains in recent years.

Tesco, which has about 30% of the total UK grocery market, has expanded to become one of the biggest convenience-store operators.

The OFT allowed Tesco to take over 1,200 T&S stores in 2002 and 45 London stores trading under the Cullens, Europa and Harts brands last year.

Last month it extended its reach in the sector further with the purchase of 21 petrol stations from Wm Morrison.

Despite mounting opposition, the regulator has insisted that convenience stores (which it defines as those operating from premises measuring less than 15,000 sq ft) are separate from supermarkets.

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