Schadenfreude, the malicious enjoyment of others’ misfortune, is a German word that has no direct translation into English so we adopted it intact. Over recent weeks, I admit to having felt rather a lot of this kind of guilty enjoyment – and all of it at the expense of the multiple supermarkets in general, and Tesco in particular.
Although we should not be over expectant as to their effect on the Competition Commission in respect of its grocery market inquiry, a number of setbacks have unexpectedly occurred for the multiples that are bound to impact on the CC’s thinking.
First the Commission served Section 109 notices on Tesco and Asda in early August ordering them to hand over millions of emails and other records of their dealings with suppliers during a June/July price war. This action resulted from complaints of potential buyer abuse, which is strenuously denied by the two supermarkets in question.
Then at the end of August, the council in Bury St Edmunds refused to grant Tesco retrospective approval for a store extension that was built without planning permission. The council could now force the supermarket to demolish the extension. The embarrassing case is the latest example of Tesco being forced to seek retrospective planning permission. Last year it was forced into similar action after it was discovered that its new store in Stockport was 20% larger than it had permission for. Steve Parfett, MD of Parfetts and a Council member of the Federation of Wholesale Distributors, vigorously challenged this particular case of planning abuse.
Last month the Competition Commission delivered another blow to the supermarket giant by ruling that its acquisition of a controversial site in Slough will hurt local consumers by reducing competition and choice. The provisional decision by the Commission follows a long-running row about Tesco’s acquisition and subsequent demolition of a Co-op supermarket on the site.
Lastly (as things stand at the time of writing), the Office of Fair Trading delivered a blockbuster on September 20 by saying the four major supermarkets colluded with suppliers over milk prices, costing consumers some pound;270m. The OFT said Asda, Morrison, Sainsbury and Tesco, together with five dairy processors, acted to keep the price of milk, butter and cheese artificially high in 2002 and 2003 by sharing commercially sensitive information. All the parties deny the charges, but if the findings are confirmed they could face sizeable fines.