Sir, – Considering Karen O'Leary's position as head of the National Consumer Agency, her views seem remarkable and surprisingly poorly informed (National Consumer Agency chief welcomes grocery price war", Home News, December 28th). "It's great," she says, adding "And I don't think anyone has proved that there has been a downside".
There is sufficient competition case law to inform her otherwise where such practices in the long term may well become predatory.
Selling vegetables below the cost required to produce vegetables is likely to foreclose competitors who do not have the same financial resources as supermarkets. Once weaker competitors are driven out, supermarkets can raise prices above competitive pricing levels. In the long run, the predator supermarket regain losses.
Worse still, the remaining market trends from being diversified to becoming oligopoly – once one of the few raises their prices, the rest follow. Furthermore, market entry for new competitors become more difficult. – Yours, etc,
BRIAN CALLAGY,
Woodfield Crescent,
London,
England.