Tesco under siege as it rejects traffic light system and faces OFT investigation

LONDON - Tesco has been criticised for refusing to introduce the new 'traffic light' system of labelling food to help consumers decide at a glance if a product is healthy or not.

The criticism comes at one of the supermarket chain's brief moments of bad fortune. Its share price fell 2% yesterday after the Office of Fair Trading revealed it likely was to conduct an inquiry into the big four supermarkets after complaints that their dominance was distorting competition and bad for consumers.

The traffic light system was yesterday formally endorsed by the Food Standards Agency, but already Tesco and Morrisons have said that they do not plan to introduce it.

Waitrose revealed in February that it would introduce the system, and Sainsbury's is also on board. Asda is to follow shortly, and the FSA said it would encourage other supermarkets to follow suit.

However, Tesco has defied calls to introduce the scheme, which will highlight the levels of salt, fat and sugar in food, leading to accusations of arrogance. It plans to introduce its own system and warned that the FSA system is simplistic. It highlights the fact that cola and apple juice would have the same amber sugar rating in the FSA's system.

Tesco also defends itself against claims that its dominance is bad for consumers. It pointed out that consumers have never had more choice in the range of products that they can buy.

A worst-case scenario for supermarket chains should the OFT inquiry go ahead would be their forced break-up. Another alternative would be that they are stopped from further expansion.

But some pundits have predicted that the OFT's focus on planning and supermarkets could end up helping them, if the result was a relaxation of planning laws.

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