The controversial competition test has divided the grocers. This week it moved a step closer to being introduced, so how has the news been received and what does it mean?
What is the competition test?
The competition test was one of the proposals to come out of the Competition Commission’s report into the UK grocery market, published in April last year.
If it were introduced, its aim would be to block supermarket developments by grocers already powerful in a local area, to make room for rivals.
Didn’t Tesco win its appeal against the competition test?
Yes, in March this year an appeal by Tesco to the tribunal against the test was upheld on two grounds – that the Commission had not properly assessed the economic costs of
the test and that it had failed to sufficiently address the test’s proportionality and effectiveness.
So was that the end of it then?
No, the tribunal did not dispute the justification for the test itself; it remitted the matter back to the Commission for further consideration, particularly regarding its costs and benefits.
So what’s happening now?
Last week the Commission moved a step closer to implementing the test as it published a report stating it will bring lasting benefits to consumers.
It said it has been carrying out further analysis on the benefits and costs of the test since the tribunal. It concluded consumers would benefit from increased competition and that the benefits off-set the costs of any delay between a retailer’s development being blocked and a rival’s alternative taking its place. It said that over the long term these benefits would outweigh any such initial costs.
What do the grocers think?
Tesco still isn’t in favour. It pointed out that at the end of a two-year investigation the Commission found that, on the whole, competition in the UK grocery sector is effective.
It said the test will cost jobs by deterring investment in the areas that need it most. Tesco added that it is concerned the Commission’s findings are based on “far-fetched assumptions which don’t reflect the reality of the planning system”.
Asda, however, said that those opposing the test are opposing more competition. “Now more than ever, it is essential that consumers have the widest possible choice of supermarkets to do their shopping in. The competition test will do just that, helping hard-working families access lower prices and giving them greater choice,” the grocer said.
So what’s next?
The Commission has invited responses to the provisional decision by July 29 and will assess these before publishing its final decision by October 5.