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OPINION: Almighty Conglomerates

tesco, supermarket, conglomorateAre our supermarkets too strong or is regulatory framework too weak? In a free market economy you need strong competition supported by strong regulation. Do we have both?

We have four, possibly five, big groups who dominate the market alongside a small but vibrant small sector comprising about 50,000 independents. Would you call four or five operators an effective competition? In big cities maybe, but in smaller towns this could effectively be a duopoly and near monopoly.

You also have a situation where the big groups adopt predatory pricing to kill off the competition and once the competition is gone, go back to higher pricing. Is this ethical or acceptable in a free market economy?

Surely not, but then we need ultra strong regulation. Do we have this? Not if you read the story about Tesco who have been slashing prices in Scotland in breach of the promise they made to the Competition Commission to maintain a uniform pricing policy. Industry figures indicate that Tesco prices in Scotland are generally 5% lower than competitors.

Tesco claims that there was a computer glitch and systems failure. A cynic however, might regard this kind of behaviour as an attempt to capture a higher percentage of the market.

No wonder the Labour opposition has called Tesco “an almighty conglomerate”.

One retailer, Arul Masilamany in Chigwell, has taken on the Tesco Express next door and invested £150,000 on refitting his store “top to bottom” — he took £42,000 in his first week. Well done Arul!

Long may we continue to have these bold and imaginative entrepreneurs to take on the almighty conglomerates.

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