Price discrimination - Tesco and One Stop

The Times has an article on alleged price discrimination tactics by Tesco using it’s One Stop branches.

*Tesco has a 31 per cent share of the UK grocery market
*It is the dominant supermarket in 72% of Britain’s 121 post-codes

The article alleges that “Britain’s biggest supermarket uses its chain of 520 One Stop convenience stores — which many customers do not realise it owns — to charge up to 14 per cent more for goods than it does in Tesco-branded stores” - many of the One Stop stores are located in areas of below-average economic prosperity and there are fears that higher prices for staple products will hit lower-income families hard and contribute to a worsening of diets and lower real purchasing power. In defence Tesco claims that One Stop is an independent chain with a different distribution and supply network and higher operating costs (perhaps due to the smaller average size of these outlets). It claims that it sets its prices against a main competitor Cost Cutter.

The supermarket industry has been heavily scrutinised by the Competition Commission and the OFT in recent years but the One Stop outlets appear to lie outside the new rules governing local monopoly power in a given town or city.