Competition watchdogs have been accused of “dystopian madness” after launching an inquiry into supermarket loyalty schemes in a bid to “help tackle cost of living pressures”.
The Competition & Markets Authority revealed today it had begun a review to explore if loyalty prices, such as Tesco’s Clubcard and Sainsbury’s Nectar card, were “misleading” shoppers.
The probe, which will last until July, will explore whether loyalty prices offered by supermarkets are “genuine promotions” and “as good a deal as presented”.
The authority said it would also look at “whether any groups of shoppers are disadvantaged by promotional activity” and “whether loyalty pricing is impacting consumer behaviour, and whether this has an impact on how supermarkets compete with each other”.
Its investigation follows two major reports by the body last year on competition in the groceries sector, which cleared both suppliers and supermarkets of artificially inflating prices to exploit the cost of living crisis.
That followed accusations from MPs on different sides of the House of Commons, and some consumer groups.
However, industry experts were highly critical today of the decision to put loyalty prices under the spotlight, especially as they have been one of the key tactics used to keep prices down.
“You have to question the sanity and purpose of the CMA in launching this inquiry,” Shore Capital analyst Clive Black told The Grocer.
“It is madness and almost dystopian in its nature.
“This follows two CMA reports into the lunatic accusations from the likes of Liberal Democrat leader Ed Davey, which found no evidence whatsoever.
“We live in a country where there are at least 10 competitive supermarkets and in a world where customers can vote with their feet.
“It’s not down to the CMA to fix prices and tell supermarkets the price they should be charging.
“This investigation is a terrible waste of public money.”
Ged Futter, founder of The Retail Mind, said: “I don’t understand either what the CMA is expecting to find with this inquiry, or what it thinks it could do about it if there was a problem.
“I think the fact that this has been quietly put out today without much of a fanfare says a lot.
“For the CMA to actually ask the question, whether loyalty prices has had an impact on consumer behaviour, is ridiculous. Of course it has. Rocket science this is not.”
BRC assistant director for consumer, competition and regulatory affairs Graham Wynn: “Retailers will assist the CMA in their review, while continuing to deliver excellent value for their customers. Whether it’s everyday low value, or genuine bargains through loyalty schemes discounts, retailers know they have to demonstrate clear value to get customers through their door.”
A CMA spokesman said: “The review is at an early stage and we have not formed any views on the issues.
“We are now beginning our engagement with supermarkets. We will publish an update on our work in July 2024, and expect to complete our review by the end of the year.”
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