Town & Country Planning, February 2007
I sat listening to the Today programme this morning, and its interview with the chair of the Competition Commission, with a good deal of exasperation.
Exasperation partly because it sounds as though – once again – the Commission is going to uncover a whole range of abuses by the supermarkets but do absolutely nothing about them, if it is possible to divine anything much form an announcement of ‘emerging thinking’. I’m not sure it is.
And partly because of the irritatingly authentic voice of the British establishment: everything is very reasonable, very balanced, and ‘very difficult’.
Unlike the American system of government, the British system trains its doyens in the skills of doing nothing about a problem for twenty years or so, then grasping a solution and riding roughshod over everybody at the last minute.
Exasperation also because of the assumptions by commentators that this is a free market versus rigged market argument, and that somehow consumers will decide and get what they want. Neither of these are true.
It is in defence of the free market that regulators really have to act – to protect some modicum of choice between different modes of shopping, and against the local market abuses identified but not tackled by the last supermarket inquiry in 2000.
Research in the USA also shows that it only takes a third of high street shoppers to shift a third of their spending to a new superstore for the whole high street to close. In the UK, the high street traders will also be facing horrific rent hikes made possible by the clone stores.
It isn’t about the will of consumers. The question whether we will have local shops to choose from at all is now in the hands of the Competition Commission. Maybe they will act, now they say they will concentrate on local markets – I hope they will take a look at Bicester (30,000 people and six Tescos) – but somehow it looks rather doubtful.
The truth is that nearly everyone in the country wants a check on this centralising power in the grocery sector. Competition, suppliers, local economies, high streets and consumers would all be better served if there was a Big Ten and not a Big Four.
But what tools do we have to make that happen – to do to the UK supermarkets what the American regulators did to Standard Oil or AT&T? Certainly not the poor battered planning system, and the rather timid people who now operate it in so many places.
Probably not the competition regulators, whose definition of consumer interest – basically low prices – corresponds to no human consumer I know of. The vast majority of real consumers may appreciate better prices, but not at the expense of their high street or the environment.
Yet this strange, one-dimensional blunt instrument is all the protection we now have to save open markets against monopoly power.
It looks as if it is going to fall to politicians to do something, bowing to public pressure – perhaps by passing the Sustainable Communities Bill now meandering through the committee stage in the House of Commons.
Because when the dust has blown away, and all the careful qualifications set out by the Commission chairman this morning, one fact seems to me to remain.
If suppliers are reduced to signing away the right to have their invoices paid in 30 days – and have to wait three months (incidentally providing Tesco with a permanent interest-free loan big enough to demolish any smaller competitor) –that seems to me to be prima facie evidence of monopoly.
Only suppliers with nowhere else to go could possibly agree to such terms, especially as they also have pay hefty introduction fees to the Big Four for stocking their products at all. This is the waves that the dead hand of centralisation makes as it removes yet more local variety and choice.
It is sad to think the great jaw-boner John Kenneth Galbraith is no longer with us, but it was his wisdom that summed up the problem of regulators.
They are, he said, “vigorous in youth, rapidly turning complacent in middle age, before either becoming senile or an arm of the industry they are meant to regulate.”
Let’s hope the Competition commissioners, when they next get together, have a go at proving him wrong. But don’t let’s hold our breaths.