Link to this page: http://www.socialistparty.org.uk/issue/509/3384
'Competition' dominated by a few giants
THE 'BIG four' supermarkets and their so-called 'competition' are making the headlines again. A month ago the 'big four' were implicated in a dairy product price-fixing scandal. However the recent Competition Commission's (CC) full-scale inquiry into the sector was greeted with relief in supermarket boardrooms.
The inquiry claims that, 'on most counts', this £120 billion a year groceries market "delivered value, choice, innovation and convenience". However, one of the inquiry's 'concerns' is that there is not enough 'choice' of supermarkets in some areas.
Some supermarkets buy up land in so-called 'land banks' to prevent other supermarkets opening stores near them, leaving stores like Morrisons 'under-represented' in some areas. The CC wants planning laws and restrictive agreements to address the problem.
The CC says we don't have enough 'choice', but they really mean we don't all have a choice between shopping at all the 'big four' all the time. Ensuring competition? It sounds more like entrenching monopoly.
Between them, the 'big four' – Tesco, ASDA, Sainsbury's and Morrisons – account for 60.8% of the groceries and retail market. Add in Co-op, Waitrose, Somerfield and M&S and 73.5% of the market is accounted for! Who would buy up these huge 'land bank' sites except these eight monopoly players?
The CC talks about creating an 'independent watchdog' to monitor the sector. If this was made up of supermarket workers, small farmer and small business representatives and local communities this would be a welcome step. It will clearly not be and will make little difference.
Besides, making good-quality affordable food available to everyone is most people's main worry, not whether the 'big four' can compete between themselves! The CC would have us believe that 'competition' ensures affordable food. Last month's price-fixing scandal shows this is not true.
The big four's domination of the groceries market means they can to a large extent manipulate the market to their own benefit.
The real issue is not some illusory 'competition' but the need for democratic control of these huge enterprises.
The CC report implies that having at least one Tesco, ASDA, Sainsbury's and Morrisons in every town ensures us all 'choice'.
But all the leading brands are available in all the 'big four'! All the 'own-brand' products, bar the labels, are virtually identical! The 'choice' must be the few pence price difference between supermarkets.
These few pence mean a lot for ordinary working people. But surely low prices can be better ensured by bringing the supermarkets into public ownership as part of a democratically planned food production and distribution network.
It is not so much 'competition' that keeps prices lower but the big four's use of economies of scale, ie, the ability to produce and make masses of grocery products cheaply due to modern techniques.
These benefits would be preserved and even enhanced by bringing supermarkets into democratic public ownership, cutting out the big business profits and all the duplicated effort, wasted resources and damage to the environment.
In The Socialist 8 November 2007:
Socialist Party workplace news
International socialist news and analysis
Socialist Party news and analysis
Socialist Party NHS campaign