Retailers should not be allowed to have more than 25 per cent of the grocery market share if the power imbalance between superstores and producers is to be rectified, according to food and farming alliance Sustain.
The group, which has about 100 agri-food members, has also demanded a more stringent public interest test be carried out when retailer mergers are proposed.
This new test would take account of sustainability, fairness and other social interests as well as consumer prices.
The recommendations were made in new Sustain report on supermarket failure, which came as Sainsbury’s and Asda offered to sell up to 150 stores to win approval for their £12bn merger.
At the moment, Tesco has the greatest share of the grocery market, with 27.8 per cent. But a Sainsbury’s-Asda merger would see the new mega-store take a 31 per cent share.
Vicki Hird, Sustain’s head of farming, said: “Our study and many others suggest the concentrated, multiple supermarket model is perpetuating low incomes, precarious farm livelihoods and large inequalities.
“It is abundantly clear we need strong Government action in a number of policy areas to ensure fairer supply chains.
“This could include, for example, clarifying competition laws so supermarkets know how they can collaborate to support producers here and overseas, or capping retailer market share at a nominal 25 per cent so none can dominate.
“Such measures are well overdue to rebalance the food system and reduce the power and dominance of multiples.”
The Sustain report also called for ‘stronger and broader’ fair dealing measures in the Agriculture Bill, which cover the whole supply chain in all sectors, as opposed to just first purchasers in meat and dairy.
Another recommendation was to add rules in the EU’s Unfair Trading Practices Directive to the Bill.
This would prevent supermarkets from cancelling orders at the last minute or changing contracts retroactively, among other things.