Market Power in UK Food Retailing

Rising levels of concentration in many national retail food markets within Europe has lent weight to concerns expressed by farmer and consumer groups about the possible abuse of market power. In the UK, the growing dominance of supermarkets in the grocery market has also aroused the interest of the competition authorities which have been monitoring the situation for nearly a decade (See Box 1). As the Competition Commission (CC) is poised to launch its second statutory inquiry in that period, this article discusses the problems that regulators face in detecting market power and report on results from a recently proposed test that may assist them in this task, strengthening the role for economic evidence in competition law. Test results for the UK point to the existence of buyer power in a number of fresh food markets investigated supporting the conclusions of the CC's first investigation and the renewed interest in UK food retailing sector. Rising Retail Concentration In recent years, many EU states have witnessed a marked rise in the level of concentration in their food retailing sectors with attendant concerns regarding the potential for market power abuse (see Dobson et al). Statistics on concentration vary according to how markets are defined but comparable figures across the Union suggest that there is a north-south gradient with the mos