Abigail Townsend: Customers have the final say on the way we shop

If there's one thing I hate, it's to be wrong. About anything. So ploughing though the first wave of submissions to the Competition Commission about the UK's supermarkets made for some pretty galling reading.

I have always been a staunch defender of the supermarkets, including - whisper it - Tesco, and saw little point in the Office of Fair Trading referring them to the commission. The UK has one of the most competitive markets in the world. Customers can make active choices about where to shop: if they don't like Tesco, in 99 per cent of the cases there will be a J Sainsbury right around the corner.

To do my weekly shop, I drive past a Tesco, J Sainsbury and Somerfield to get to my preferred destination (Waitrose, if you're wondering). No one is forcing me, or anyone else, to shop at Tesco. So the notion that the big four supermarkets are distorting our choices, and thereby making a market uncompetitive, has never washed with me.

And it still doesn't. After all, the best way to support your local small shop, if you are worried Tesco might put it out of business, is to continue using it.

The same goes for the landbank. These are the undeveloped sites that the big four have acquired. If they developed them all, their market shares will soar. But they have only been able to build up these sites because they have been successful - that is, we keep shopping with them. And if we use these sites when they are developed, then surely that is simply demand and supply matching.

But the submissions have proved an eye-opener on the supermarket sector's treatment of suppliers. That conditions are tough is hardly a surprise - it would not take an economist to work out that the cheap prices we pay at the till have to be squeezed out of costs somewhere up the line.

But the picture emerging is far removed from just an efficient market operating on tight margins. All the big organisations and trade bodies have their opinions, but some of the most interesting stuff comes from two farmers. One makes a couple of points in particular: that Tesco is now in a position to start dictating behaviour not just to suppliers but to its competitors, and that consumption of UK-produced fresh produce will continue to decline unless we accept that something needs to change.

This farmer relates how, last year, he wrote directly to Sir Terry Leahy, warning that Tesco's policies were contributing to a decline in the UK supply base. Sir Terry responded swiftly and admirably, inviting him to present his case to relevant directors. A senior buyer then visited his farm.

Nothing, though, has actually changed - though the farmer is not bitter. As he points out, Tesco will only change when its customers do.

So on that point, I'm pleased to say, I'm still right - customer power remains the strongest tool we have against any perceived dominance of the supermarkets. But the Competition Commission investigation into the sector is also the right thing to do. Suppliers need someone bigger and even more powerful fighting their corner - someone just like the commission.

Virginal memories

At other times, investigations can appear to be a good thing from the outset. The OFT had no choice about whether to act on even the merest suggestion that British Airways and others had been fixing prices.

What is most interesting here, however, is that it appears to have been Virgin that tipped off the regulator. Nothing has been confirmed, but if that is the case, then it's an extraordinary reprise of a battle between Virgin and BA that started over a decade ago, the "dirty tricks" saga.

It would appear that Sir Richard Branson has a long memory. But he has chosen a winner here. Asking customers, rather than investors, to pay for the rising cost of crude was always going to be a tough story to sell. If it was done in a cartel, then that is truly unforgivable.

a.townsend@independent.co.uk