15 February, 2008
Tesco responds to competition commission press release on provisional remedies
The Competition Commission today published its proposed remedies following the provisional findings of the UK Groceries Market Investigation.
Responding to the proposed remedies, Tesco Executive Director for Corporate and Legal Affairs, Lucy Neville-Rolfe said:
"These remedies have been published for consultation and we will continue to discuss them with the Competition Commission during the remaining months of the inquiry to ensure the best outcome for consumers. They follow the CC's provisional findings, less than four months ago, that the UK groceries market is delivering a good deal for consumers.
The market is delivering for customers
"Tesco's overall prices have fallen by almost 30 per cent in real terms since 1997, saving the typical household around £5,000 on their shopping bills. In that time, rail and tube fares, petrol, the council tax and the TV licence fee have all gone up. But at Tesco we have lowered prices, improved quality and delivered greater choice, bringing the benefits of modern convenient grocery retailing to communities.
Improving Supplier relationships
"We support the CC’s proposal to extend the Supermarkets Code of Practice to a wider range of retailers which appear to include Aldi, Budgens, Co-op, Iceland, Lidl, M&S, Somerfield and Waitrose. It will help producers and farmers if their relationship is governed by the Code and it will help the industry by providing a level playing field.
"We are also pleased that they have taken our lead by recommending other retailers appoint in-house compliance officers to monitor and deal with any issues that may arise in dealings with suppliers.
"Tesco considers that introducing a new ombudsman could be bureaucratic and an unnecessary cog in a supply chain which has worked well for consumers. More red tape is likely to stifle innovation and investment and reduce the ability of retailers and suppliers to work together flexibly to deliver the best deals for customers.
"It is good that the Commission has decided not to require any divestments of stores or land which would have been disproportionate and interventionist, and would not be in the interests of staff or customers.
"We also understand their position on restrictive covenants and had already volunteered to release restrictions on some sites and will comply with others.
"However we are concerned that the findings on exclusivity arrangements could hit our ability to invest in poorer areas in need of regeneration. For example in Beckton, East London, where we are the anchor tenant, we invested millions of pounds and as the anchor tenant were key to redeveloping an old gas works into a modern retail park which has transformed the local area. Getting rid of exclusivity could jeopardise future developments like this.
Competition Test will reduce competition
"The proposal for a competition test does nothing for the high street and is a growth cap on successful retailers whose activities in this highly competitive market, as the CC agrees, benefits consumers.
"It would also introduce additional bureaucracy, costs and delays – which we estimate at up to £150m a year - slow down the planning processand hit investment. Regeneration could also be damaged by the proposed competition test, putting in doubt mixed-use developments such as that in Streatham, South London.
Serving Local Communities
"Against the background of the benefits supermarkets deliver to customers, it is important to have a sense of proportion. The CC has examined almost 2000 areas around the country, and appears to believe there may be competition concerns in just a few. All Tesco stores in the country have the same popular national offer and we do not weaken the offer where we have fewer stores.
"It is clear that the industry is working for consumers and we believe it is important that any remedies do not harm this. We will continue to work with the CC during the consultation process to ensure the consumer's voice is heard."
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