The independent retailer at the centre of a storm over alleged below-cost selling by Tesco four years ago has called on the Competition Commission to review its interpretation of predatory pricing.
Ian Proudfoot, joint managing director of the Proudfoot Group, has criticised the definition that predatory pricing involves deep discounts followed by price rises above normal levels once a rival has been put out of business.
In a response to Emerging Thinking, Proudfoot says there is no need for a national multiple to ruin its reputation by increasing its prices more than the normal competitive price structure after a bout of severe price cutting.
"The definition of predation has been around too long and should be altered, as the perpetrator will not consider increasing prices after it has established its larger slice of the local catchment area, as this would cause complaint and bad will," he writes. Proudfoot says that predatory pricing is instead being used as a tool to increase long-term sales.
The Proudfoot Group suffered a loss in sales at its store in Withernsea, North Yorkshire, when Tesco offered a 40% discount voucher to residents. The case has been widely cited as evidence that the multiples are too powerful.
"We would like the Commission to consider whether it thinks that isolated and targeted 'below- cost selling', which is subsidised by the rest of a multiple's retail efforts and profits, should be stopped," writes Proudfoot.
On the subject of planning, Proudfoot makes a plea for applications for supermarkets to be deferred indefinitely until it can be proven to the local authority that the owner is paying stamp duty, in full, in the UK.
He says this would prevent companies setting up off-shore operators to legally avoid paying stamp duty - an accusation that has been levelled at UK retailers in the past.
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