Tesco faces store sell off

MPs and business groups representing small independent stores have called for the controversial step to be considered by retail regulators.

In August, the Office of Fair Trading (OFT) ruled Tesco does not have an unreasonable dominance but after an appeal by the Association of Convenience Stores (ACS) the watchdog said it would withdraw its previous decision and 'reconsider' the issue.

ACS claims Tesco does indeed enjoy unfair supremacy over the grocery market and although the company has enjoyed large profits during recent years, suppliers have been forced to sell their products too cheaply.

While Tesco, which accounts for one in every eight pound spent by shoppers in the UK, has expanded into opening small local convenience stores over the past four years, 7,377 independent shops have shut down.

Giving evidence at an inquiry by the All Party Parlimentary Group for Small Shops into the future of UK high streets, Lucy Neville-Rolfe, Tesco's corporate affairs director, admitted the company plans on doubling its network of high street Express outlets to 1,200 by 2015.

It is also believed that rival chain Asda intends to follow Tesco's lead.

Speaking at the inquiry, competition minister Gerry Sutcliffe confessed he believed there was "something wrong" with the grocery market, and that "something needed to be done" to address it.

Labour MP Jim Dowd, who is chairing the parliamentary inquiry, said: "We are approaching the technical definition of what constitutes a monopoly. Therefore regulations have to be considered.

"We are considering the potential for divestment. In the US, the cockpit of international capitalism, they have taken this approach in a variety of industries, notably telecommunications with Bell."

After taking evidence from the OFT, The All Party Group will publish its findings in December. Only the Competition Commission has the authority to force Tesco to sell off any of its premises.