TESCO defends business practices

According to reports in the Financial Times, Tesco has presented a robust defence of its business practices to the Competition Commission. In its response document, sent to the Commission at the end of last week and due to be published today, Tesco – which has been singled out by the inquiry because of its leading position – dismisses the suggestion it can dominate local markets, saying other supermarkets could compete if only they were good enough.

“Less efficient retailers and suppliers sometimes struggle and seek to blame those that are more successful,” the document says. The company argues it should not be punished because rivals had “not been as flexible as we have”, specifically stating that Sainsbury “neglected its store pipeline” and Asda “took its eye off the ball. We believe that the planning system should not insulate retailers from healthy, vigorous competition,” it says. Tesco also insists its rivals have upped their game after a period of making “poor strategic decisions”.

The retailer has also made the case for using broad definitions of what a “local” market consists of and points out that the rise of Internet shopping means the majority of the population can buy their groceries online at national prices. Tesco said its “national brand image would be badly tarnished” if it were to price goods higher in towns where it had a bigger slice of a market than others where competition was more fierce. The Commission said that its work on the definition of local markets was at a “very preliminary” stage and that it would welcome suggestions from all parties. It hoped to come back with provisional findings by the summer.