Caught In Price War Crossfire

Posted on August 19, 2007
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When you, as part of your hectic lifestyle experience, meander along the seductively laden aisles of supermarkets and see signs such as ‘Buy one, get one free’ or ‘25% off’, do you imagine that it is Mr Tesco or Mr Asda who is doing this act of kindness out of the goodness of his heart and taking the hit in his own pocket?

If so, would you feel less likely to think that he was a jolly nice and charitable chap if you found out that he was actually, so to speak, squeezing the pips out his suppliers? That the vast commercial leviathan of which he is head actually crushes the life out of small and medium businesses, just so that your shopping is more affordable?

Would you, to take a broader picture, feel as well off as perhaps you do, if you found that food would really cost a great deal more if it was priced fairly, rather than through the need for slavery and bonded labour and routine adulteration in order to scrape a living together?

The Telegraph has this:

The Competition Commission believes it has found the smoking gun in its ongoing probe into the practices of the Big Four supermarkets.

The antitrust watchdog has unearthed a number of emails between the supermarkets and their suppliers in which the retailers are thought to have demanded that suppliers give them discounts or face being blacklisted.

The emails, which are alleged to have contained threatening language, are thought to have been sent by Tesco and Asda in the run-up to this summer’s £520m price war. The commission has now demanded that Tesco and Asda submit all emails, written correspondence and taped phone calls between themselves and their suppliers over a five-week period around June, when both companies announced massive price cuts. Both store groups are complying, although an executive close to Asda said that it will mean the commission sifting through 11m emails.

The emergence of the retailers’ emails comes just weeks before the commission is due to report the preliminary findings of its two-year investigation into supermarket practices. Until now, a series of competition inquiries have failed to prove suspicions that large retailers like Tesco are abusing their dominant position.

The Guardian has this:

But the supermarkets claimed they had nothing to hide. A spokeswoman for Leeds-based Asda said: “We adhere to the code of conduct between suppliers and supermarkets.

“During the period which the commission want to see our correspondence there were about 11 million emails to suppliers. But we are happy to help and we have got absolutely nothing to hide.”

A spokeswoman for Tesco said: “The Competition Commission has issued Tesco and other parties with Section 109 notices in order to gather information quickly that might normally be withheld on confidentiality grounds.

“We have nothing to hide and we are doing what we can to assist the commission with this enormous data request. We expect the commission to conclude that at Tesco relationships with suppliers are professional and act to the ultimate benefit of the customer.”

Well, as the government is always telling us, if you have nothing to hide, you have nothing to fear, so no doubt that will all be OK.

The Competition Commission is following this investigation as part of a wider probe into whether the big four UK supermarkets (which also includes Sainsbury’s and Morrison’s) abuse their position of dominance.

Remember the old, clumsy and semi-literate slogan Sainsbury’s used: “Making life taste better”? It is certainly food for thought, but it leaves a nasty taste in the mouth.


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Share This Tags: food | Tesco | Asda | corporatism | deception

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