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Trade has escaped worst of Competition Commission

Published:  18 January, 2007

Amid the talk of landbanks, planning reform and supermarket codes of practice, what does the Competition Commission's provisional report into the groceries market really mean for producers, wholesalers and retailers of wine and spirits?

Certainly, those hoping for a ban on below-cost selling of alcohol will be disappointed.

Examples of spirits apparently being distilled, bottled, distributed and sold for a combined margin of under 30p clearly pointed to below-cost selling by the superstores, but the Commission has nevertheless chosen not to act.

The continuation of such pricing behaviour will have a devastating impact on smaller spirits retailers, who do not have the deep pockets and high margins on other parts of the business to allow them to match the superstores like this.

The other argument on alcohol was that low alcohol prices fuelled binge drinking.

However, the link between low alcohol prices and alcohol harm remains tenuous, at best. We have to be careful about linking health policy to competition arguments.

Besides, moves in Scotland to ban various forms of price promotion - most of which are normal and fair commercial practice - will not deal with outright low pricing, even where it is below cost.

Perhaps we should be grateful that the Commission is not moving towards remedies specific to the alcohol category.

James Lowman is chief executive of the Association of Convenience Stores