Supermarket bosses 'stunned into silence' by corporate greed question at Parliamentary committee hearing

Leading supermarket bosses were stunned into silence during a grilling by MPs after being confronted about apparent corporate greed in their businesses.

Senior representatives from the traditional ‘big four’ retailers - Tesco, Sainsbury’s, Asda and Morrisons - were unable to answer a question from Labour MP Andy McDonald about how their shareholder dividends, as well as CEO salaries and bonuses, “sits with the general public”. The Middlesbrough MP said significant payouts to shareholders and pay incentives sitting in the millions suggested that their focus was not on the cost of living crisis but “elsewhere”.

In a quick-fire Business and Trade Committee hearing that was intended to focus on food and fuel inflation, the retailers also rejected the notion that the country’s supermarket industry could be viewed as a cartel. They insisted they were doing their best to keep prices low for their customers despite significant cost pressures.

The hearing has come as supermarkets have been forced to bat away claims they have been profiteering off the back of record inflation. On Monday (26 June), the International Monetary Fund (IMF) said corporate profits had accounted for “almost half the increase in Europe’s inflation” since 2021.

The government has considered implementing a food price cap in supermarkets as part of a bid to bring food inflation down. UK food prices have been rising at the fastest pace in Western Europe, according to NationalWorld analysis.

Supermarkets blame ‘external pressures’ for higher prices

When asked by MPs why their fuel and food prices remained high at the same time as profits had risen by hundreds of millions since their last pre-Covid accounts, the UK’s top-two supermarkets - Tesco and Sainsbury’s - both blamed pressures they claimed were beyond their control.

Pressed on his employer’s pricing by Conservative MP Anthony Mangnall, Tesco commercial director Gordon Gafa insisted it is the “most competitive we have ever been”. Asked specifically about fuel prices, Mr Gafa said 90% of the pump price was down to input costs, taxes and duties, with the war in Ukraine having been the largest factor in upping input costs over the last year. Despite MPs insisting it had significant power to dictate pricing, he insisted Tesco’s powers were “limited”.

Mr Gafa also tried to claim the supermarket was transparent about its pump prices given “we display them on big screens and we are very open about them before you drive into a Tesco”. However, the committee pointed out the retailer had to do so anyway. Asked whether he would support a Northern Ireland-style fuel price checker to boost transparency on pricing, the Tesco man said he would, with Sainsbury's also backing the idea.

Sainsbury’s food commercial director Rhian Bartlett, when asked about food inflation, insisted higher wages, energy prices and commodity costs were all to blame, but added that the supermarket was shielding consumers from the worst of them. Ms Bartlett said: “We make less than 3p in the pound. The input cost prices we have had have not been reflected in full in shelf-prices.”

Questioned about whether she believed a food price cap would work, she said: “We’re generally considered one of the most competitive food markets in the world. I’m not sure what price caps would add to that process, other than bureaucracy”. She added: “This market self-regulates to a positive extent”.

CMA report looms over proceedings

In several answers to the committee, the supermarkets referred to the Competition and Markets Authority’s (CMA) impending report on whether retailers are competing on price in a legal way as a reason why they felt unable to answer certain questions.

Asda’s chief commercial officer Kris Comerford insisted he could not say whether retailer profit margins on fuel have increased until he gets sight of the CMA report - a view that was echoed by Sainsbury’s. However, Morrisons CEO David Potts said “there is a bit more profit on fuel”. All the retailers present insisted they had fully cooperated with the CMA.

There was also some reflection on a recent report by Which? that had found large discrepancies between the prices charged at smaller, inner-city supermarket stores and those at large out-of-town sites. Asked by Labour’s Ian Lavery whether they stock these stores with enough of their cheaper, own-brand products, the retailers present insisted they did but that space constraints prevented them from offering a wide range of products.

Morrisons, which bought convenience chain McColl’s out of administration in 2022, said it would be considering putting its value tier Savers range into these stores and placing the products where they could be found easily.