Food and Drink

Competition

Competition Commission inquiry into the groceries market - June 2006

Following the Office of Fair Trading’s (OFT) decision in May 2006 to refer the market for the supply of groceries by retailers in the UK to the Competition Commission (CC) for investigation, the CC is inviting evidence from all interested parties.

This market reference follows an initial OFT study into the sector and public consultation published in May 2006. The Competition Commission is currently carrying out its own comprehensive investigation, to see if any features of this market prevent, restrict or distort competition and, if so, what action might be taken to remedy these.

Having gathered evidence by contacting all involved parties and by advertising for submissions from any other interested groups or individuals, the Competition Commission inquiry group published an "Emerging Thinking" document on 23 January 2007 which summarised the evidence that it had gathered up to that point in the inquiry and setting out its initial views based on that evidence. Among other things, the Emerging Thinking document suggests that the behaviour of retailers towards their suppliers does not appear to be calling into question the economic viability food and drink manufacturers, processors or wholesalers. The Commission plan to look further at the impact on primary producers, where its analysis suggests that the position is less clear cut.

The Commission's target completion date for the inquiry is February 2008, some three months ahead of the statutory deadline of 8 May 2008.

A copy of Farming Minister, Jeff Rooker's letter to the Competition Commission is attached below.

Transmission of meat price changes through the food chain

In 1999 MAFF worked with a team of academic economists to undertake an independent analysis of the transmission of meat price changes from farm gate to retail. A copy of the full report is available below.

The key results are:

  • meat price changes (both increases and decreases) are fully or largely transmitted through the supply chain from producer to retail;
  • however, there are lags in the system and these adjustments typically take several months to work through the chain;
  • there is no evidence to support the suggestion of a change in pricing behaviour within the supply chain during August or September last year, when it began to be alleged that retailers were failing to pass on reductions in producer prices.

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Page last modified: 11 June 2007
Page published: 25 February 2002

Department for Environment, Food and Rural Affairs