Supermarkets under scrutiny over suppliers

20-08-2007

Supermarkets under scrutiny over suppliers
Tesco and Asda have been ordered to hand over millions of emails as part of a probe by the UK's competition regulator investigating allegations that they put pressure on suppliers to cut prices.

A report in yesterday's Sunday Telegraph said that emails sent by the two retailers to their suppliers were understood to contain "aggressive language".

The Competition Commission has now confirmed that it has issued legal notices to Tesco and Asda, requiring that they hand over relevant information so that allegations of predatory pricing can be looked in to.

A spokesman for the competition watchdog said that the issuing of the so-called Section 109 notices would allow it to "investigate more thoroughly".

The probe comes amid an ongoing investigation by the commission into the UK's £125 billion grocery market, with the regulator set to report by the end of the year on claims that the country's leading supermarkets have become too powerful and are squeezing out smaller stores due to their dominance of the sector.

However both Tesco and Asda have insisted that they have "nothing to hide" following the announcement of the latest Competition Commission probe into their operations.

A spokeswoman for Hertfordshire-based Tesco said: "We expect the commission to conclude that at Tesco, relationships with suppliers are professional and act to the ultimate benefit of the customer."

Yorkshire-based Asda also stressed that it is "happy to help" the regulator with its probe and has revealed that around 11 million emails were sent between the company and suppliers during the time period the Competition Commission wishes to investigate.

It is reported that the watchdog wants to examine correspondence that took place over a five-week period around June, when both Tesco and Asda are claimed to have announced significant price cuts.


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