Convenience chains could become a target again for the major multiples after the Competition Commission found Tesco's and Sainsbury's move into c-stores had done independent retailers no harm.

The commission's surprise verdict in the provisional findings of its inquiry into the groceries market, announced this week, is significant because it means any future attempt by major supermarkets to buy an independent retail chain could be approved by the authorities on the basis it will not be detrimental to consumer choice.

One leading competition lawyer, who has worked for several retailers, said this left independents with less protection from the multiples than they had 18 months ago, before the Competition Commission began its investigation. "This may not be a green light for sweeping acquisitions but it could be an amber one," he said. "The final version of this report will be terribly important for all future decisions of the OFT on merger situations."

A major supermarket has not bought an independent since Sainsbury's snapped up Shaws in April 2005. This followed its purchases of Bells in February 2004, Jacksons in August of the same year and JB Beaumont that November. Rival Tesco acquired T&S in January 2003 and Adminstore a year later.

The commission's finding on supermarket-owned c-stores is a blow to independents, who are also facing the threat of an increased number of large supermarkets after the inquiry recommended a relaxation of the planning process, particularly in relation to edge-of-town sites, and moves to increase competition in some local markets. Retailers holding landbanks near existing stores could be forced to divest them, and there could be a ban on restrictive covenants on a site being sold to prevent retail use. Both could result in more superstores.

The findings showed ­c-store leaders failed to convince the commission that their sector was in danger because of the power of the supermarkets. The commission said there was no evidence c-store numbers were in terminal decline, no signs that below-cost selling or local vouchering harmed consumers and no proof of a waterbed effect.

The ACS, whose campaigning led the OFT to refer grocery to the commission last year, restated its belief the commission's views on the convenience sector were based mainly on "flawed" data. The ACS said it would be try once more to persuade the commission that the data, produced by Experian Goad, was flawed. The figures take account of stores in town centres, while many independents were based in villages and suburbs.

"If the commission believes c-store numbers are growing, then it will never accept that below-cost selling, vouchering and price differentials are hurting anyone. This is fundamental to our entire argument," said ACS chief executive James Lowman.

But inquiry chairman Peter Freeman said: "Competition is tough. But if you get your offer right, and the consumer likes it, then there is nothing actually, despite the distortions we've identified, that prevents a good business offer succeeding."

Peter Freeman p30

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