It's not over, of course. The fat lady hasn't sung, there's an ombudsman to appoint, a GSCOP to write, retailers still have to give undertakings and everyone from the ACS to Tesco has two months to appeal. But after 722 days the Competition Commission has delivered its report.

Upstaged by the SWAT team at the OFT ("cartel-busting is always interesting for the media , your job is more cerebral"), the report has also been overtaken by events as food price inflation alters the balance of power for the first time in seven years.

Indeed, with EU agriculture commissioner Mariann Fischer Boel suggesting food prices across Europe have risen faster than justified, he admits it would have been "interesting" and possibly even "valuable" to extend the two-year-long investigation.

"With the rising commodity costs in the past half year , the balance of price pressures has been reversed, which has to some extent changed the dynamics of the retail industry. Our difficulty, and it is a difficulty, is that we are operating under a statutory timetable. There's an argument for saying, 'well, let's hold the report back and see how a broadly competitive market actually deals with a massive increase in input prices. It would be very interesting . But it's impossible for us to start saying the margins [for any party] have increased, or that the share is greater than it should be. I don't think there's evidence of [profiteering]."

Nonetheless, Freeman professes himself satisfied, and proud, at the work he and his team have done, particularly in terms of addressing concerns suppliers would be fearful to speak out. "There was lots of comment that we weren't getting to the bottom of things or not seeing enough people. My sense is that after we did our email trawl [at Asda and Tesco] last June and July, a lot of that concern went away. We had six weeks' worth of material involving two major retailers and their suppliers, in the heat of a so-called price war. You can't ask for much more.

"The inquiry has been a lightning conductor. An opportunity for people to get things off their chest. I hope they have done as we've spent an awful lot of time listening."

If Freeman detects concern about the inquiry now - aside from the "inevitable" disagreements about the remedies - it's how the ombudsman will work. He promises to shift the panel's attention, as soon as possible, to practical measures, making sure there is a credible code in which both retailers and suppliers believe.

"Once you cross the Rubicon on that, it becomes a virtuous circle, not a vicious one," he says, and prefers to draw a veil over the "odd instances" of "reprehensible behaviour" to which he referred in our previous exclusive interview. "We very much hope that sort of behaviour will not happen in the future. Those events sparked the request for emails, so they served their purpose. Our concern now is to get the remedies established, preferably for the retailers to agree them by undertakings, and to get the ombudsman up and running. It would be in their interests to do that, so having a witchhunt now, or delivering retribution, is a little bit beside the point."

Freeman also denies the inquiry ducked the issue in terms of landbanks. While the report requests a speedy release of restrictive covenants on 30 plots, the Commission has accepted the supermarkets' argument it is not in their interests to sit on large plots of land for long periods just to spite rivals. "We are sitting on the most comprehensive database ever of grocery retailers' property holdings . Having examined these in June 2006 we identified 18 landbanks. Over the course of the inquiry a number turned into stores. We decided, in an evolving market, measures that would help to sort out local market power over time were better than divestitures."

The competition test is no less controversial. With the number of so-called Tesco Towns increasing every year, was the 60% cap set by the Commission chosen because it was conveniently unconfrontational? Freeman insists not. "Tesco criticised us for a 60% cap , it suggested it was too low. On the other hand, we make no secret of the fact two of the panel members preferred a lower level.

"The view of the majority was to frame a remedy that was the right balance between not being a restriction on development and meeting the overall purpose of encouraging new entry. Looking at potential developments in the pipeline reduced the number of candidates for divestment, anyway.

"We're talking about a robust but simple test that stands the test of time. We had to strike a balance. Of course it's not a substitute for detailed planning considerations but these are already undertaken by planning officers. All we wanted to do was to insert the retailer's identity into the process."

So, what about the OFT? Hasn't it undermined the entire report? Apparently not. As Freeman points out, tobacco was never in the terms of reference for his inquiry. And dairy has been ongoing long before the inquiry began (even though the statement of objections emerged only last autumn). Which leaves the new allegations.

Asked if he was taken aback, Freeman refuses to comment on other activities involving the OFT, but he qualifies that if such an investigation is taking place, it is looking at different things. "As an intellectual proposition, it's perfectly possible to have a market where the observable outcomes for consumers are on the whole good, but where on the operational level there are attempts to [fix] prices."

Effectively denying rumours the Commission tipped off the OFT, he adds: "On the basis of our inquiry, we have not found evidence of co-ordination, but have looked at whether the conditions could exist for it, and have concluded they may be present. That material may be useful to the OFT in investigating the sort of allegations it is reported to be investigating."

And he adds: "In the interests of consumers there are different ways of approaching different aspects of market behaviour."n

An at-a-glance guide to the main findings

1 Grocery Supply Code Of Practice



Suppliers have welcomed a strengthened Code that will help their dealings with retailers. The Grocery Supply Code Of Practice will be applicable to all retailers with grocery turnover of over £1bn. It will only apply to direct suppliers but the Commission has not ruled out extending it to cover primary producers . Retailers now must:

Not make retrospective changes to terms and conditions of supply

Not hold suppliers liable for losses due to shrinkage

Keep written records of all supplier terms and conditions

Enter binding arbitration to resolve any dispute under GSCOP

Provide information to the body enforcing the code and appoint an in-house compliance officer

Automatically provide standard terms and conditions to a supplier in writing before their first contract

Tell suppliers they can refuse requests, refer a buyer's decision to a more senior position, and cannot be delisted for complaining



2 Ombudsman



An independent supermarket ombudsman will police the GSCOP. The office should be established by the retailers but if they fail to appoint one BERR should. If neither can do this, the OFT will do the job. The ombudsman will:

Investigate supplier complaints and gather information from retailer records to identify breaches

Publish guidance of differences in interpretation of the code, and an annual report on the code



3 Competition test



A competition test, favouring new entrants and grocers with low local market share, will be applied as part of the planning process. Grocers must provide the OFT on request with accurate figures for the groceries sales area of any store in the UK. The OFT will be involved in all planning applications for stores bigger than 1,000 sq m and will advise local plann ers whether a retailer has passed or failed . Applications pass if within a 10-minute drive of the developed store:

The retailer is a new entrant; or

There are four or more fascias operating larger grocery stores; or

There are three or fewer fascias and the retailer has less than 60% of the grocery sales area



4 Restrictive covenants



The Commission has cracked down on retailers limiting the use of land after its sale. Large grocers have six months to release 30 existing restrictive covenants in highly concentrated local markets and are banned from imposing new covenants that may restrict grocery retailing. They are also required not to enforce other exclusivity arrangements for five years



5 Landbanks



Large retailers were found not to be engaging in landbanking to stop rival retailers opening nearby. It said holding undeveloped land was an expensive way of impeding competitor entry compared with leasing to third parties or selling with a restrictive covenant



6 Edge of town



The Commission's position that the planning needs test does not act as a barrier to entry or expansion for grocers could have given the multiples the green light to develop more edge-of-town developments. The needs test has since fallen beyond its remit, however, with the government now intending to replace it with a new test with a strong town-centre-first policy.



7 Waterbed /below-cost selling



The Commission has thrown out the ACS's claims of a 'waterbed effect', whereby the lower prices that large grocery retailers extract from suppliers result in higher prices for other retailers and wholesalers. The big four obtained lower prices from suppliers than wholesalers, but this did not give rise to an adverse effect on competition. It also did not find fault in multiples' use of below-cost selling.

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