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Shoppers pay extra
in store monopolies

01/03/2000

BRITAIN'S two biggest supermarkets have established regional strongholds where shoppers are being forced to pay more for their groceries, a recent survey has revealed.

While most British towns contain a variety of supermarkets, shoppers in 30 areas, mainly in the south, have a choice of Tesco or Sainsbury's but none of the other big five chains. Cambridge, for example, has three Tesco stores and two Sainsbury's supermarkets, but no outlet for Safeway, Asda or Morrison's.

Last week the Competition Commission contacted the five biggest supermarkets to warn them it was considering forcing them to close branches in towns where they were found to be running monopolies or "duopolies" and inflating prices.

City experts have claimed that shoppers in the 30 "duopoly" areas pay about 10% more for an average weekly shop than people in areas of high competition - a claim denied by the supermarkets. However, surveys at two stores in the "strongholds" of Cambridge and Exeter and two in Huddersfield and Hull, where there is stiff competition, found price differentials. Shoppers at Sainsbury's in Cambridge and Exeter pay an extra 10p for a packet of Alpen and 22p more for a litre of Cranberry Classic juice. The shoppers in Huddersfield and Hull would save 1.97 on the 13 items where price differentials were found, equivalent to 8% of the 23.85 basket.

Tesco shoppers in Cambridge and Exeter pay 10p more than those in Huddersfield for six barn eggs, 3p more per pound of white cabbage and 14p more for two litres of traditional lemonade. Buying the six items with price differentials would cost £1.12 more, equivalent to 19% of the value of the items. Tesco in Hull was cheaper than Exeter and Cambridge on three items. Industry sources say the real number of price differences is far higher.

Shoppers in Cambridge were furious when told that they paid more for staple items. "It's ridiculous and shouldn't be allowed," said Phil Cadman, 44, a father of two. "Prices should be the same across the country. The poor farming community here has enough to contend with." Rebecca Norman, 32, a housewife, said: "Superstores are going to charge whatever we are prepared to pay. In areas where there is less competition I suppose we will have to pay more. It is a marketing fact of life."

The Competition Commission has been carrying out a painstaking investigation covering every postcode area to identify areas where supermarkets have monopolies or duopolies. The commission has kept the results secret, but three weeks ago it was revealed that some supermarkets had already been found "provisionally" guilty of setting higher prices where they are dominant. David Reid, deputy chairman of Tesco, said prices were lowered in areas of increased competition but not raised in areas without nearby rivals. "We have a national price list," he said. Sainsbury's said prices were maintained nationwide, but cut on 1,600 lines to meet local competition. Both stores will have to appear before the commission next month.



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