The OFT, in its consideration of the retail grocery market, has considered the extent to which planning restrictions, among other factors, may act as a barrier to competition. Land and related transactions increasingly impact on the cost structure of competing firms. The Director General is particularly concerned about escalating land costs, planning delays and site development costs and the extent to which they contribute to the cost structure of firms. Overall, he believes that significant barriers now exist so that potential competition from new entrants may not be an effective constraint on the pricing behaviour and other strategies adopted by the major grocery retailers.

  That being said, the Office has always made it clear that planning per se is an issue which lies outside the scope of the present investigation. We see our task as being to look at the performance of the market within the context of such constraints, rather than to challenge the constraints themselves.

Competition Policy Division

Branch 1

30 March 1999