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LONDON--Supermarket giants including Tesco face a red light on their expansion plans from a new investigation into the balance of power in the grocery market by the Competition Commission, reported BrandRepublic.com.
The Office of Fair Trading had originally decided that the market did not merit investigation by the Competition Commission, but is rethinking its initial decision following a legal campaign by a group of independent storeowners, who want the supermarkets' dominance investigated, according to the report.
The Association of Convenience Stores appealed to the Competition Appeal Tribunal, which ordered the OFT to "swiftly" produce a new decision on whether to refer the grocery market to the commission, BrandRepublic.com reported.
The OFT last week admitted "insufficient reasoning" in making its original decision in August. In its original inquiry, which took 18 months, the OFT treated the convenience store sector as separate from the supermarket sector, which allowed chains dominant in the latter to expand in the former, according to the report.
The convenience sector grew 7.3 percent to 23 billion pounds in 2004 and is set to top 30 billion pounds by the end of 2008. Tesco, Sainsbury's, Somerfield and the Co-operative Group are snapping up scores of small chains and shops, and the convenience-store sector has seen a burst of acquisitions, the most recent of which was Jacksons Stores, sold to Sainsbury's last month, reported BrandRepublic.com.
The ACS is hopeful that the trend towards supermarkets opening their own convenience store formats will be slowed by the Competition Commission's intervention.
According to TNS figures, 74 percent of the grocery market is accounted for by Tesco, Asda, Sainsbury's and Morrisons.