Retail giant Tesco is to hit back at allegations that it exerts a stranglehold over the UK’s grocery market.
The UK’s largest supermarket chain is expected to criticise the way in which the Competition Commission enquiry classifies the grocery sector, and its definition of the term “local”.
Tesco’s 28-page report, due to be published later today, will say: “It is not credible…to suggest that a grocery retailer could become so entrenched in a local area as to make that area incontestable by others.”
Tesco will argue that almost every consumer has a choice of where to shop, that the market is national and not local and that the commission’s assumption of what constitutes the local market is up to three times smaller than it should be.
The report will also include findings that even small price rises can cause shoppers to switch their store allegiance, and that consumers will spend up to 30 minutes driving to the retail outlet of their choice in what is a “fiercely competitive” environment, compared to the 10-15 minute drive criteria used by the commission.
Tesco’s conclusions were drawn using a research tool called the Small but Significant Non-transitory Increase in Price (SSNIP) test, which the retailer says can identify the habits of marginal shoppers. Tesco’s director of corporate and legal affairs told one Sunday newspaper that the firm was hopeful the results would have an impact with the industry watchdog.
The document comes as many retail analysts predict that the commission will keep Tesco’s expansion in check and prevent the spread of more so-called Tesco towns - such as Inverness, where it collects 25p in every £1 spent - by introducing a competition test that will benefit store chains not already operating in the area.
But Tesco has slammed this potential move as “wholly inappropriate”.
The Competition Commission is investigating whether or not the UK’s four largest retailers - Tesco, Sainsbury’s, Asda and Morrisons - abuse their power to dominate the grocery sector, limiting consumer choice.
The four retailers control about three-quarters of the sector, and Tesco has the largest share at around 31 per cent.
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