Tesco Ready to Join UK Government in Alcohol Price Restrictions

22/02/08 Tesco has told the Government that it is willing to take an active role in discussions around the introduction of legislation to ensure responsible pricing on alcohol and alcohol promotions.

But Britain’s biggest supermarket warned that Ministers must initiate and lead these discussions to avoid retailers falling foul of competition legislation which prevents discussion of prices between businesses.

Tesco’s Chief Executive, Sir Terry Leahy, has personally told the Prime Minister that Tesco would work with others in the industry as well as government experts and the police to tackle concern that lower-priced alcohol might influence anti-social behaviour. He also discussed a package of other measures to help tackle the growing problem of anti-social and underage drinking.

Urging Ministers to act, Executive Director for Corporate and Legal Affairs, Lucy Neville-Rolfe, said: “Binge drinking and other alcohol-related social problems are a serious concern to us all, but it is far too simplistic to apportion responsibility for this on price alone. If low-cost alcohol were the only factor then countries such as France and Spain, where prices are much lower than in the UK, would have similar problems and countries like Finland, where alcohol is expensive and its availability restricted, would not.

“However, supermarkets do sell a lot of alcohol and we accept that we have a role to play in addressing the problem of anti-social drinking. We need to better understand the impact of price and be mindful of the fact that the vast majority of people consume alcohol responsibly and shouldn’t be penalised for the actions of less responsible drinkers.

“To get this understanding and move forward all shops that sell alcohol need to act together – and this is where we are being held back by the law.

“Competition law prevents businesses discussing anything to do with price with each other and imposes severe penalties on anyone who breaches it. The current dispute over milk highlights how even independent decisions to help address a wider societal problem can be misconstrued and result in responsible businesses being wrongly accused of price fixing.

“The only safe solution is for the Government to initiate and lead these discussions and to bring forward legislative proposals which Tesco and others in our industry can support. Such proposals would have to apply to all retailers of alcohol otherwise they would be ineffective as those looking for cheap alcohol would simply shop with lower priced operators not covered by the legislation, undermining our business and achieving nothing.

“If Ministers act we pledge our support in helping to develop proposals and make the legislation work.”

Tesco said that its own experience through customer research and Clubcard data shows that most shoppers buy alcohol as part of the weekly family shop. It also reveals that after buying alcohol on promotion shoppers do not buy the same type of alcohol again for a number of weeks which suggests that they use promotions to stock-up and not to drink more.