CMA raises spectre of grocery price intervention ahead of food summit

The Competition and Markets Authority (CMA) said while it had not seen evidence pointing to specific competition concerns in the grocery sector “at this stage”, it would be undertaking an investigation as it was “important to be sure that weak competition is not adding to the problems”.

In an announcement yesterday, the CMA said: “Given ongoing concerns about high prices, we are announcing the stepping up of our work in the grocery sector to understand whether any failure in competition is contributing to grocery prices being higher than they would be in a well-functioning market.”

The watchdog said the investigation will assess how competition is working overall in the grocery market and identify which categories “might merit closer examination across the supply chain”.

The watchdog’s chief executive Sarah Cardell said: “Grocery and food shopping are essential purchases. We recognise that global factors are behind many of the grocery price increases and we have seen no evidence at this stage of specific competition problems.

“But, given ongoing concerns about high prices, we are stepping up our work in the grocery sector to help ensure competition is working well and people can exercise choice with confidence.”

The CMA also said it had found evidence that retailers are putting up petrol and diesel prices to unnecessarily high levels, squeezing consumers already being hit by the cost-of-living crisis.

The watchdog’s intervention comes on the eve of a Food Summit being organised by Defra between retailers, suppliers and the government.

As has been reported, talks are expected to cover issues of inflation and food security in the UK food and agriculture sector, with representatives from retailers, the British Retail Consortium and the National Farmers’ Union all set to be present.

Ahead of the summit, the BRC’s director of food and sustainability Andrew Opie said: “With food production costs rising significantly over the last year owing to high energy costs, global food prices and labour shortages, we have seen a knock-on impact to prices on the shelves. As these costs begin to fall, we expect to see food price inflation falling away in the coming months.

“Government can also play a role by minimising the financial impact of some incoming regulations, such as its deposit return scheme and reforms to extended producer responsibility that might otherwise increase costs for consumers.

“We hope the food summit will also provide the opportunity to discuss sustainable UK food production, a coherent labour policy to address shortages across the supply chain, and greater focus on carbon reduction and the path to net zero.”

The competition watchdog has announced an investigation into possible weakening of competition in grocery pricing, ahead of a meeting with retailers, suppliers and government.