Supermarkets let off hook on below-cost selling

The Competition Commission will not take action against supermarkets selling alcohol at below-cost, despite a two-year inquiry into the grocery sector.

A new independent ombudsman will resolve disputes between suppliers and retailers, the commission's final report published today confirmed.

And changes to the planning system will make it harder for one company to dominate an area.

But despite alcohol being identified as one of the main products that stores discount on, there was no mention of action.

The report also acknowledged that shops use some products as loss leaders "to tempt customers into the store at certain times of the year, such as Christmas, or for events such as the World Cup".

A previous version of the report had revealed that during the 2006 World Cup total discounted sales by Tesco, Sainsbury's, Morrisons, Asda and Somerfield were a staggering £38.6m.

Peter Freeman, the commission's chairman, said: "We have looked extensively and listened very carefully when looking at all the matters raised with us but our overriding concern throughout has been whether the market is working well in the interests of consumers.

"In many important respects, consumers are receiving the benefits of competition, such as value, choice, innovation and convenience, but we need to take appropriate action to address those areas where they could be served better and where their interests could be damaged in future."

Freeman said previously it had found no evidence of "predatory" pricing strategies - where retailers deliberately undercut other local firms to put them out of business.

He added: "We are competent to judge competition issues, but not social issues like alcohol. It's not us, sorry."

Mark Hastings, the British Beer & Pub Association's communications director, said supermarkets should be "prepared to do their bit" on being more responsible on alcohol sales.