Retra welcomes Conservative proposal. But PCA warns plans could hurt both consumers and retailers

Below-cost selling ban on the cards

Conservative Party proposals to ban the practise of below-cost selling have been welcomed by the electrical retailers association, Retra.

The Quality of Life Policy Group, a conservative think tank made the recommendation in its report, ‘Blueprint for a Green Economy’ as part of its suggestions on how to curb the dominance of supermarkets and help to support retailers in all sectors.

Retra president, John Hutchinson said: "This report highlights real and pressing issues that independent retailers have battled with for a long time. Supermarkets continue to tighten their grip on the market and appear hell-bent on crushing the competition by whatever means necessary."

Keith Warburton, CEO of the Professional Computing Association however disagreed saying that: "There are times when anyone in the supply chain might wish to sell at below cost, whether they are a supermarket, an independent reseller, a distributor, a vendor or indeed a producer of raw materials such as silicon and copper."

"This could be down to reasons such as over-stock, new models coming into the channel, a wish to build a brand awareness, a need to boost cash flow or to counter the actions of a competitor," he added.

"Resellers, whether they are large retailers or small independents are likely to take advantage of their supplier’s needs and will generally reflect channel issues in their stocking and pricing."

"It is worth remembering that what might appear to be a below cost offer from the standpoint of the small reseller, might be quite profitable from the point of view of a supermarket, that has maybe been able to do a spot-deal for many thousands of an item that a vendor is over-stocked on."

"If the intent of any proposed legislation is to try to limit the dominance of big-brand supermarkets I believe that legislators would have to tread very carefully in order not to damage the price flexibility that retailers, large and small, would wish to hold on to."

"The problem might be better addressed from the standpoint of existing anti-competitive legislation, in other words does below-cost selling by the supermarkets (and I believe this is yet to be proven in our marketplace) limit consumer choice by driving smaller resellers out of the high street?"

The move, if passed into law, would bring the UK into line with other countries in Europe which have similar legislation designed to prevent below cost selling.

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