How long is a bit of string? You might well ask the same about Competition Commission inquiries. We have been all but promised one by the Office of Fair Trading for the grocery market, but this investigation will probably take at least two years to complete.
Of course, it will all be worthwhile if at the end of the process wholesalers achieve the natural justice they deserve. And that is to be able to run their businesses on a fair trading basis that allows them to compete professionally in a sustainable manner. Effectively, that means they have got to be able to achieve fair cost prices that will allow the independent retailers they supply to survive and thrive. The issue at stake is quite clearly to do with the terms on which wholesalers buy goods from manufacturers versus those the superstore giants can extract for similar quantities.
However, the Office of Fair Trading, which makes the recommendation for a review, is apparently saying that its main reason for doing so is because it believes the current planning laws may be stifling competition. All well and good, you may say. But where exactly does the OFT think this lack of competition might exist? Surprisingly, not on the High Street – but in the area of large format stores on greenfield sites.
Planning matters are important, but FWD would oppose any liberalising of planning law that opened up the prospect of major new players being feather-bedded into the UK grocery market by allowing ever greater numbers of large stores to be built on greenfield sites. That is not the answer to today’s problems in the UK grocery market and never will be.
Wholesalers’ concerns, quite rightly, centre on the issues of supermarket abuse of buying power, their pricing behaviour and incursions into the c-store sector. These views came through loud and clear at our recent annual conference. FWD has told the OFT that too much focus should not be put on one aspect of the need for an inquiry to the detriment of the others, and called on it to ensure that this does not happen.
Of course it is essential that an inquiry takes place, but it must be balanced and cover all the issues. The OFT should not be setting the agenda in order to emphasise the land banks question. The pivotal issue in the UK grocery market is instilling fairness into it so that the wholesale mechanism can flourish. That is the only way the independent retailers of today, and in the future, will be able to survive. FWD will continue to fight for this crucial, balanced approach to be achieved over the coming months.