måndag 18 februari 2008

Supermarket competition enquiry


Sainsbury's Empire, originally uploaded by sonicdante.

The Office of Fair Trading is concerned about supermarkets' pricing behaviour. The dominance of the four supermarket giants Tesco, Asda, Sainsbury's and Morrisons is to be investigated again, the third time in seven years. The stores control almost 75% of the £120bn grocery market and the OFT is asking the Competition Commission to investigate.

The watchdog said there was evidence that the buying power of big supermarkets could distorts competition and producers complain that they are squeezed down to selling at rock bottom prices. There are also concerns about planning rules and supermarket land holdings.

There is an underlying problem here which is being ignored. Where land is freely available, it is easy for individuals to start up in business, whether as producers or retailers. But where all the land is occupied, then ownership is effectively monopolised - unless there is a holding cost on land, such as a land value tax. In the absence of such a tax, there is every reason for supermarkets, house builders and all sort of other large corporate players to buy up land and sit on it whilst they wait to get what they want.

As long as Britain's present no-charge land tenure system continues, more and more of the economy will be concentrated into the hands of fewer and fewer agglomerates.

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