APPENDIX 31
Memorandum submitted by the Department
of Trade and Industry (Q53)
TERMS OF REFERENCE OF THE COMPETITION COMMISSION
INQUIRY INTO SUPERMARKETS
The Director General of Fair Trading (DGFT) referred
the supply of groceries by supermarkets to the Competition Commission
on 8 April 1999. The Commission were asked to determine whether
a monopoly exists and whether it operates or may be expected to
operate against the public interest. The initial inquiry by the
Office of Fair Trading raised several competition issues, one
of which was the nature of the relationship between supermarket
multiples and their suppliers, including agricultural producers,
and the ways in which buyer power is exerted. A copy of the DGFT's
press notice announcing the reference is attached at Annex A [not
printed].
The conduct of the investigation is a matter for
the Competition Commission. They have written to all supermarket
Chief Executives to inform them of the progress made in the inquiry
so far. A copy of that letter is attached at Annex B [not printed].
It indicates that the Competition Commission is currently investigating
the supply chain. It has taken evidence from agricultural suppliers
to build up a picture of customer/supplier relationships. It is
paying particular attention to suppliers of fresh produce, and
will be seeking further information from suppliers of such goods.
The Competition Commission is looking as far upstream
as suppliers of liquid milk to supermarkets. It is also considering
the supply of other dairy products. As with all other fresh produce,
if the Competition Commission decides that there is a need to
look further upstream then it will do so.
6 December 1999
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