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Has Tesco become a monopoly?

By Channel 4 News

Updated on 09 April 2007

Britain's largest supermarket has become a monopoly, argues economist Andrew Simms in his new book. Not so, replies Tesco.

"Every little helps," boasts Tesco. But what happens when a little becomes a lot?

Economist Andrew Simms has just written Tescopoly, a 372-page book on how Britain's largest supermarket rose to prominence. And the book is far from a homage.

"There's a deep irony," Simms told Channel 4 News online, "in the way that loosely regulated economies - the US and the UK in particular - lurch towards monopolies under the free market.

"In fact they end up with just the opposite - such as a monopoly like Tesco."

It is a view that Tesco rejects completely. The company told Channel 4 News online that, with an overall 13 per cent share of the UK retail market, it could never be described as a monopoly.

'There's a deep irony in the way that loosely regulated economies lurch towards monopolies under the free market.'
Andrew Simms, author, Tescopoly

Tesco points to the statistic that more than 90 per cent of the population in this country have a choice of at least three different stores within 15 minutes' drive.

And it dismisses Simms's claim that it has failed to deliver on a promise 10 years ago to ensure better pay and conditions for food producers in developing nations.

Simms says his own experience of visiting a pineapple plantation in the Dominican Republic showed him the disparity between the pay and conditions of the people there and the price tag of products in the UK.

Andrew Simms

Andrew Simms

"What we can do," Tesco says, "is to invest millions of pounds into local economies, helping to provide tens of thousands of real jobs at our suppliers and giving people the chance to improve their own lies."

Closer to home, Simms maintains that large supermarkets destroy local wealth in towns across the UK, creating "an economic vacuum where the money gets taken out of these towns and then ends up back with the shareholders".

It is another argument that Tesco refutes. The retailer says that when it invests in local communities, it is creating real jobs and real career prospects for local people. And it says the money that its employees earn is spent in local shops and on local services.

Tescopoly: an extract

"Supermarkets argue that proof of their popularity is in the number of customers who shop at their stores. On one level, this is an empirically ridiculous argument. People need food, and if most other grocery shops have been put out of business there is little choice left but to shop at a supermarket.

"This argument is like a motorway making a similar claim according to the number of cars driving on it. In itself, this doesn't tell you whether it is a good or bad thing, merely that the road is used."

Tesco concedes that some retailers will fare better than others, but it notes that shops such as its smaller Tesco Express outlets stimulate trade for local retailers.

But as well as destroying local wealth, Andrew Simms believes that the relationship of a large supermarket to its local community is completely different to that of a local shop.

"A shopkeeper is likely to notice when the old lady from number 26 doesn't come in to pick up her paper. But checkout 97 is not going to do that!"

The argument runs that local independent shops feed the community around them, promoting sustainability, both economically and socially.

'Many of Mr Simms's arguments seem to be predicated on the notion that the shopping experience reached its zenith 40 years ago.'
Tesco spokesperson

To which Tesco replies that it takes its role as a good neighbour very seriously indeed, citing a new scheme which allows its employees to do voluntary work, paid by Tesco.

Indeed, the supermarket dismisses Andrew Simms because his arguments "seem to be predicated on the notion that the shopping experience "reached its zenith 40 years. We disagree," it goes on.

Evidently so, because as Simms warns, "If Tesco carries on as it is, it will double its floor space in within 10 years' time."

Tescopoly is published by Constable on 29 March, price £7.99

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