LONDON (Reuters) - The Competition Commission's long-awaited remedies report on its two-year investigation to ensure better competition in the country's 120 billion pound grocery market could be released on Friday.
A Commission spokesman said the report, which had been expected on Thursday, was not yet ready to be published.
He said it could be out on Friday but did not rule out its release slipping into next week.
The decision is being closely watched by the largest supermarket groups Tesco, Asda, Sainsbury and WM Morrison Supermarkets that stand to be most affected by any changes to the system.
The Commission has said it could consider introducing an ombudsman to adjudicate on issues arising between grocers and suppliers, and may advise changes to planning laws.
In the provisional findings published on October 31, the Commission found there were features of the grocery market that prevented, restricted or distorted competition.
Update: 16/02/2008
By Clara Ferreira-Marques Reuters - Friday, February 15 08:06 pmLONDON (Reuters) - The Competition Commission has recommended a tougher code of practice for supermarkets and a change to the country's local planning rules to include a "competition test" before new, large stores are approved.
Its provisional recommendations on Friday -- part of a two-year investigation to ensure better competition in the 120 billion pound grocery sector -- also included measures to prevent exclusivity deals with local authorities and an end to land covenants it says are used by large retailers to stop competitors from using land they are selling on.
It recommended that retailers be made to release existing covenants and proposed a ban on future arrangements, but stopped short of requiring any sales of land or stores.
The Commission also recommended a new, more stringent code of practice for the industry -- the Groceries Supply Code of Practice -- to replace the existing supermarkets code. It will be widened to include all grocers with a UK turnover greater than one billion pounds, a move which should include mid-sized and smaller players like Co-op, Lidl or Waitrose.
It said a new ombudsman should be brought in to oversee the code and arbitrate on disputes between grocers and suppliers, a move that had been expected by the industry as part of the long-awaited recommendations.
Friday's decision has been keenly awaited by the largest supermarket groups -- Tesco, Asda, J. Sainsbury and WM Morrison Supermarkets -- that stand to be most affected by any changes to the system.
Britain's largest retailer Tesco, which has just under a third of the grocery market, has been forced to defend its competitiveness throughout the inquiry in the face of rivals.
In a statement shortly after the Commission published its provisional remedies on Friday, Tesco welcomed moves like the extension of the code of practice, but said it considered a new ombudsman to be an "unnecessary cog" in the supply chain.
It also warned that scrapping exclusivity deals with local authorities could hit the ability to invest in poor areas.
Under the current system, stores like Tesco can agree to invest in rundown areas -- like Beckton in east London, where it is redeveloping an old gas works -- in exchange for exclusivity.
Friday's recommendations would force grocers to limit deals to five years.
COMPETITION TEST
Under Friday's proposals, a competition test would be introduced into the planning system to allow Britain's local authorities to rule against further development by a retailer that already has a strong local presence.
Asda, part of Wal-Mart Stores Inc, has lobbied for planning rules to be suspended in so-called "Tesco Towns" -- areas where Tesco is strong -- so it can build out-of-town centres.
Tesco, in its response on Friday, said the competition test would act as a "growth cap" for successful retailers and add an estimated 150 million pounds a year to planning costs.
Asda said it supported the competition test and Sainsbury, Britain's third-largest supermarket, said it welcomed remedies it said would bring the investigation nearer to a close.
In the provisional findings published on October 31, the Commission found that there were features of the grocery market that prevented, restricted or distorted competition.
The Commission had said it was looking at changes to the planning system to facilitate greater availability of land for development outside town centres.
The Commission, which said it had received over 550 submissions in the inquiry, said responses to Friday's provisional decision on remedies are due by March 7.
The inquiry, the third in seven years into Britain's grocery sector, is expected to conclude in the spring.
(Reporting by Clara Ferreira-Marques, editing by Richard Chang)
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