Local spatial monopoly and competition regulation: reflections on recent UK and US rulings

In both the United Kingdom and the USA the past year has seen an intense scrutiny by the regulatory authorities of competitive conditions in the food retail industry. In the United Kingdom, a 16-month Competition Commission inquiry into the possible existence of a monopoly situation in relation to the supply of groceries from supermarkets, which cost the industry and government an estimated »20 million and on which the Commission alone spent »3.7 million, was presented to Parliament in the form of a 1200-page report in October 2000. An important facet of that inquiry was the issue of local spatial monopolies in UK food retailing. Here the Commission expressed its c̀oncerns' about aspects of the competitive structure of local markets, concluding that `̀ the planning system is not designed to safeguard competition and consumer choice'', and that `̀ conditions exist for current levels of concentration in some local areas to increase to such an extent that consumers' interests might be put at risk'' (Competition Commission, 2000, volume 1, page 157). In the USA, during the same period, the Federal Trade Commission (FTC) has similarly been exercised by the issue of local spatial monopolies in the context of the dramatic wave of consolidation sweeping through the US food retail industry (Wrigley, 1999; 2001). `Landmark' decisions by the FTC in relation to horizontal merger and acquisition activity in the industry have been widely interpreted as being both a distinct departure from the FTC's past policies and practice and as signalling a significant shift to regulatory tightening. My thesis in this commentary, is quite simply, that the regulation of competition between firms in local markets is an intensely, albeit rather underexplored, geographical issue, worthy of concern to economic geographers who profess interests in `̀ doing regulation, governance and institutions'' (Peck, 2000, page 62), particularly those concerned with probing how national regulatory frameworks shape the character of interfirm relations (Gertler, 1997, page 55).