Anthony Batty asks if we really need the Competition Commission to promote competition between UK supermarkets.
In the news recently, the UK’s Competition Commission has been flexing its muscles in the area of supermarkets. Somerfield may have to sell stores, after buying what Morrson’s did not want after acquiring Safeway (a one-time subsidiary of the American supermarket company).
Do these people really feel that by virtue of the fact a supermarket has two stores within some arbitrary distance they have a monopoly? Or are able to raise prices and earn large profits? For starters the barriers to entry for say Iceland to open a new store are simply planning permission. If they feel customers would use the shop I am sure at least one of the major players would open up a store. Not to mention continuous competition from supermarket home delivery, local shops and the fact people may just drive another few miles if they do not like the selection they are offered. Supermarkets are one of the most competitive areas in the modern economy, if a company does not keep pace with the efficient supply chain, changing demand (such as the low carb craze that swept through the UK) it will find itself the target of a takeover bid, or in administration. This is not because of the work of government departments; rather it is the free market at work. Only through this competition can we find which stores give us what we want, at a price we are prepared to pay. If one firm is not performing we go elsewhere, if prices are too high we use an alternative retailer. There simply is no need for bureaucrats to be in charge.
I do agree however, with the basic premise of more competition. For this reason I find myself reverting to a point made by the late Screaming Lord Sutch, why is there only one Competition Commission? (In his day, the Monopolies and Mergers Commission.) Surely in the interests of competition we should have several. By allowing new entrants and getting rid of the protected monopoly that exists at present, firms can choose between different conclusions and suggestions. Lower administration costs and fewer worries about whether or not an action will be allowed, means lower prices for consumers. In that way we will have free and fair trade, without the diktats that are not in the interests of firms or consumers.