Tesco's dominance on the high streets may be curbed

Tesco's dominance on the high streets may be curbed

	Published : Mon, 07 Nov 2005 10:05 By : James Rowe Print this Story

LONDON: Tesco Plc., the largest supermarket chain in Britain, may be forced to sell some of its shops if the government intervenes in a bid to contain its dominance in the retail sector, according to media reports. Several M.P.s and representatives of retailers are known to have apprised the regulators to initiate such a measure.

Jim Dowd, the Labour M.P., who heads a parliamentary team -- the All Party Small Shops Group -- which is inquiring into the future of the retail segment, told a British newspaper that the big four high street players have a huge market share, which is continuing to grow. He mentioned Tesco specifically saying the company had said in 10 yeas it could have 1,200 stores in a sector it was not present 10 year ago.

The Office of Fair Trading (OFT) has meanwhile said it is giving evidence to the group. This may prompt the government to hold an inquiry into the dominance by the four supermarkets -- Tesco, Asda, J Sainsbury and Wm Morrison -- according to analysts.

Tesco had recently told Dowd's team that it wants at least to double its number of small shops in the next 10 years. It put forth its view that its move into convenience stores had been good for shoppers. The company's corporate and legal affairs director Lucy Neville-Rolfe told the committee that the company has been able to expand over the past 10 years because it had helped transform the lives of ordinary people by taking prices down and improving quality and range of goods.

She could not, however, explain the company's stand on the regulatory distinction between supermarket and convenience store shopping. She admitted that distribution and sourcing for both the chains was handled centrally.

The committee wants to establish whether there is need for an investigation by the OFT into the retail market and to make recommendations on public policy to protect consumers. It will publish its findings in December.

John Fingleton, OFT's new chief executive, is expected to appear before the group.

The group has been reported to be critical of the "creeping centralisation" on the country's high street and is expected to use its findings to demand curbs on the powers of the four major supermarkets. It will submit its recommendations to ministers in the Department of Trade and Industry, which is expected in turn to come out with its own report.

At a hearing of the group last week, competition minister Gerry Sutcliffe, said he believed there was "something wrong" with the grocery market, and there is need to do something to address the issues. However, he felt the OFT was the right body to consider issues relating to competition policy.

Tesco commands 30 per cent of the 76-billion-pound U.K. grocery industry, accounting for more than one in every eight pounds spent by shoppers.