Retailers and Competition Policy: Lessons from the UK Groceries Market Investigation
Coppet, Switzerland
15 May 2009
Hosted By: The Universities of Geneva and Lausanne
NERA Director Dr. Mark Williams presented a seminar on competition policy in the UK retail sector.
Competition in grocery markets has been extensively examined by the UK Competition Commission in the recent market investigation into groceries (2008), as well as in a series of merger cases including Safeway (2003) and Morrisons/Somerfield (2005) and the previous supermarkets monopoly inquiry (2000).
These cases are notable in many respects, including for the way they address the link between local- and national-level competition; the various empirical techniques used to assess the nature of local competition; and the approach taken to identifying local "problem" markets.
Dr. Williams explained why, as well as the local dimension to competition, the national dimension might also be important. He refered to the Safeway investigation, which was concerned about the effect of the proposed mergers on national rivalry as well as impacts on local competition.
Dr. Williams also outlined the use of empirical techniques to assess the nature and extent of local competition. These techniques include price and margin concentration studies; entry impact analysis; discrete choice modeling; and surveys to establish diversion ratios and show their relevance beyond pure retailing to markets such as betting shops, cinemas, hotels, and pubs.
Finally, Dr. Williams outlined the UK approach to identifying "problem" local markets using intensive mapping software and how such an approach, combined with local consumer surveys, has guided divestment decisions in merger cases.
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