Tesco has rejected claims that its buying power and market dominance could threaten the existence of suppliers and damage the supply chain.
In a 27-page report, the supermarket leader this week launched its own response to the recent Competition Commission interim report into the state of the UK grocery sector.
The CC had been asked to investigate the role of supermarket buying-power. It reported back that R&D spending had risen, not decreased over the past few years. Thus, the Competition Commission argued that this served as a good proxy for the level to which growers were being squeezed.
In its response, Tesco agreed heartily, saying: “We do not think that this evidence, including the results of the detailed GfK supplier survey, is surprising - as we have said before, it is in retailers’ interests to have a healthy supply chain.
“The best evidence that the grocery supply chain has been continuing to invest is the explosion in product choice that it has produced for customers over recent years.”
In relation to other supplier issues, and particularly the perceived fear for suppliers to speak out against the multiples, the CC has invited further evidence from suppliers and, in particular, supplier complaints.
Tesco argued that the ‘silent majority’ remained on its side. “It is perhaps worth remembering that we and the other grocery multiples have thousands of suppliers, the vast majority of whom we believe are content but many of whom may remain silent. Nonetheless, we welcome the CC’s call for further evidence from suppliers, and hope that many will tell the CC of their positive experiences.”
In response to the accusations of collusion between multiples to keep produce prices artificially low, the CC had found that there was simply no evidence. Tesco re-iterated its position, saying: “This is not surprising: a wide range of operators compete intensely with one another, barriers to entry and expansion are low, and new products are constantly emerging. You would therefore not expect to see tacit coordination in a market as competitive as this.”
Meanwhile, in a ruling that is being viewed as a landmark for communities fighting back against the big multiples, Tesco have been denied permission to build a convenience store in Ballards Lane, Finchley.
Barnet Council initially turned down the application on December 2005 to convert the carpet warehouse, sited between the town centres of Finchley Church End and North Finchley, but Tesco appealed the decision.
On Monday, the appeal inspector agreed that the Tesco application did not demonstrate a need for an additional convenience store and that the application for an out of town store could be detrimental to the viability of the town centre.
Cllr Brian Coleman, Barnet Council's Cabinet Member for Community Safety and Community Engagement, said: "This is truly a victory against the odds. Tesco has enormous resources to fight appeals and almost never loses.
"I'm delighted that we have shown that local councils can stand up to huge retailers. The inspector has upheld our decision to protect the individuality of our town centres and this is cause for celebration here and around the country.”