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Last Updated: Wednesday, 2 November 2005, 18:25 GMT
OFT grocery market ruling quashed
Woman filling trolley in Sainsbury's
The ACS says big supermarkets pose a real threat to local shops
The Office of Fair Trading's (OFT) decision not to refer the grocery market to competition watchdogs has been quashed during an appeal hearing.

The Competition Appeal Tribunal also ordered the OFT to reach a new ruling on the issue as soon as possible.

The Association of Convenience Stores, who say supermarkets are driving out local stores out of business, welcomed the decision.

It began the appeal after the OFT ruled the sector was not restricted.

We are delighted that the Competition Appeal Tribunal has made clear that the OFT must work swiftly to produce a new decision on this matter
David Rae, ACS

The OFT's ruling followed a lengthy probe into the grocery market and the effect of supermarkets on the sector.

However, last week the group conceded it had based its decision on "insufficient reasoning".

'Quick decision'

In its ruling, the Tribunal turned down the OFT's offer to review the matter over the coming eight months, saying that the issue must be dealt with swiftly and efficiently as the grocery market was a matter of great public interest.

By failing to make a quick decision there was a danger that any move by competition authorities would merely be "bolting the stable door after the horse has left".

It also reminded the OFT that only a "reasonable suspicion" that competition was being adversely affected was needed to refer a matter to the Competition Commission.

"We are delighted that the Competition Appeal Tribunal has made clear that the OFT must work swiftly to produce a new decision on this matter," ACS chief executive David Rae said.

"We are looking forward to working with the OFT on this important issue, and we will return to the CAT if the OFT are tardy in their deliberations or produce a flawed judgment."

Dominance concerns

The ACS, which has around 30,000 members, want the Competition Commission to look into the dominance of the four big supermarket names - Tesco, Asda, Sainsbury's and Morrisons - in the grocery market.

They claim that as a result of competition from supermarkets, 2,000 local convenience stores closed down last year.

They blame "predatory" - or below cost - pricing and the rising trend for large companies to open convenience store formats for the problem.

Analysts believe this format will be the next growth area of the supermarket sector, as the smaller local stores become popular with the "time-poor, cash-rich" parts of the population.

Tesco itself is already planning permission for a number of outlets, including a rapid expansion of its Express format stores across the country, many on garage forecourts bought from Safeway.

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