Archive of Past Articles
Business & FinanceShut the Door, the Horse has Bolted
By Tony French, Forum Manager
In the last week of September, the Office of Fair Trading released a
much-discussed, widely-covered report exhaustingly titled The Welfare Consequences of
the Exercise of Buying Power.
The report is a year-long investigation into consumer buying power, with a
special focus on supermarket bulk buying and subsequent savings, or lack of savings, to
The report concludes that "there is generally a lack of price
competition" among supermarkets Tescos, Sainsburys, Asda, Safeway, Somerfield and
others. I read this in a national newspaper where a significant percentage of advertising
was taken up by supermarkets offering discount vouchers. (I was especially attracted to
the Sainsburys advert for cheap beer
) I pondered the incongruity of this as I went
to collect my post, stepping over the offer leaflet left on my mat by Somerfield and
finding my Tescos Clubcard letter in with my other post.
Still, according to the OFTs report, supermarkets are making enormous
profits while squeezing suppliers and ripping their customers off. But since when does an
approximate 3.5% net profit suggest over charging? Has anyone paid a car-servicing bill
lately? Solicitors invoice? Mortgage rate?
British supermarkets are the envy of Europe. They have shorter queues, added
service, clean bright environments and huge...no, HUGE product ranges. But theyve
also been fighting charges of profiteering and price-fixing since the early 80s.
Through a period of deep recession while we lost our businesses, homes and jobs,
supermarket profit levels remained about as much as they are now. Pity the OFT didnt
think to look into alleged over-charging or price-fixing when it could have made a