Shut Down the Superstores

We’ll only break up their monopoly by turning them into farmers’ markets

By George Monbiot. Published in the Guardian 12th August 1999.

Britain’s superstores present themselves as oases, only by making a desert of all that surrounds them. They offer convenience and choice in their stores by destroying convenience and choice everywhere else.

Yesterday we learnt that the Environment and Transport Select Committee will be launching an inquiry into the impact of the superstore chains on public life. There will be no shortage of evidence. The number of shops in Britain has declined by 40% since 1970. One third of our butchers and fishmongers have disappeared in just five years. Forty-two percent of rural parishes no longer possess a shop. Even Britain’s famously resilient Asian cornershops are, the Guardian reported yesterday, fading away. British horticulturalists have been all but eliminated. The wholesale market has collapsed. Forty tonne trucks shudder down narrow streets at all hours of the day and night.

It’s about to get far worse. Last month Sainsbury announced that it will open a further 200 small supermarkets over the next three years, and plans to build 1000 new shops altogether. Tesco and Asda intend to expand many of their biggest stores. When Wal-Mart comes to Britain, it will be able to exert a financial leverage greater than that of all our domestic superstores combined. What we are witnessing is the economic cleansing of Britain.

So the government’s decision to give the Office of Fair Trading (OFT) the most draconian powers of any commercial regulator in Europe seems timely and proportionate. While the superstores owe some of their success to innovation, good marketing and economies of scale, they are also Britain’s most shameless practitioners of anti-competitive trading. They boast about their “loss leaders”: the staple foods they sell for less than the cost of production in order to convince us that they are cheaper than their competitors. The five biggest chains shift 74% of all the groceries sold in Britain. This is perhaps the most concentrated market of its kind on earth, and conforms perfectly to the OFT’s definition of a complex monopoly. In April the fair trading director decided that the big chains have a case to answer, and referred them to the Competition Commission.

Now, thanks to the government’s new policy, the Office of Fair Trading will be able to hit them where it hurts. If the Competition Commission decides that they have been trading exploitatively, the OFT can impose a fine of up to 10% of their turnover for three years. This looks like a powerful deterrent. But if we believe that it will make an iota of difference to the balance of commercial power in Britain, we will be sorely disappointed.

The first problem is that the competition authorities’ terms of reference are so narrow that it is hard to see how they will be able to find the superstores guilty of anything. They consider the public interest to be commensurate with price: if the superstores bring down their prices, in other words, they will not be fined, even if the authorities decide that they have established a monopoly or are trading unfairly. The big chains’ monopolistic power to exploit their suppliers and drive smaller shops out of business, destroying genuine consumer choice, will not, in these circumstances, be deemed to offend the public interest. Neither are the authorities prepared to examine the superstores’ plainly anti-competitive tactic of dumping their costs onto society: by encouraging car use and by running lorries extraordinary distances across the country to support their demented distribution systems, they reap a massive social and environmental subsidy.

The second problem is that even if, unexpectedly, the Competition Commission were to rule against them, a massive fine would hurt the superstores’ shareholders, but do nothing to alter their market dominance. The big chains have already reaped the benefits of their unfair terms of trade. Even if they were to stop growing today, their stranglehold on the groceries market would continue to throttle the life out of thousands of smaller shops. They would still run a complex monopoly nationally, as well as scores of local monopolies in the towns and villages they dominate.

So how could the inordinate power of the superstores be reined in? It seems to me that we should treat them like any other monopoly, and break them up. Many of the bigger out-of-town stores should be closed down altogether, as the social and environmental burden they impose on Britain is simply unsustainable. Others could be sold off. But some, once wrested from the hands of the companies which built them, could house the farmers’ markets now slowly returning to Britain, in which local people sell the local produce that’s been all but exterminated by the superstores.

This might sound drastic, but the alternative is far more extreme: a future without small shops, without diversity and without consumer choice. Prices, in a Britain controlled exclusively by superstores, might not rise, but all of us, by subtle means, would find ourselves picking up the bill.