Tesco denies abusing local market power.

Supermarket claims Competition Commission's line of inquiry into its dominance is flawed

Zoe Wood and Nick Mathiason
Sunday April 1, 2007
The Observer


Tesco will tomorrow strenuously rebut allegations that it exerts a stranglehold over the UK's 124bn grocery market as fresh evidence suggests that supermarket demands are putting farmers out of existence. Britain's most powerful retailer will criticise attempts by the Competition Commission to establish whether it has dominance in specific British towns and cities.

In its 28-page response to the commission, to be published tomorrow, Tesco will say: 'It is not credible ... to suggest that a grocery retailer could become so entrenched in a local area as to make that area incontestable by others.' Tesco will argue that virtually every British consumer enjoys healthy choice. And it will say that the planning system, far from inhibiting supermarket growth, has enabled 600 new stores to be built by the sector in five years since 2000. The document comes as many analysts predict that the commission will check the supermarket's expansion and prevent more so-called Tesco towns - such as Inverness where it collects 52p in every 1 spent - by introducing a competition test that will benefit store chains not already operating in the area.
But Tesco has branded such a move as 'wholly inappropriate'.

The competition watchdog is investigating whether the Big Four supermarkets abuse their power. The 28-page response addresses preliminary concerns raised by the commission in January. At that time its chairman, Peter Freeman, said he was 'concerned with whether Tesco, or any other supermarket, can get into such a strong position, either nationally or locally, that no other retailer can compete effectively'.
Since then the commission has been looking at how he supermarkets compete at local level, examining whether they take advantage by hiking up prices or offering less choice to consumers when they are the dominant retailer. But Tesco has effectively dubbed the logic behind the commission's decision to go down the local route 'flawed'. It argues that a different model should be used to judge whether competition is healthy - one based on how many shoppers flit between rival stores. It also insists: 'We do not raise prices or otherwise worsen our retail offer where there is less local competition.'

In January Freeman, concerned that suppliers were too frightened to contribute to the inquiry, encouraged anonymous submissions. Some farmers have now come forward. An anonymous statement published recently on the commission's website highlights the plight of one of Britain's dairy farmers. 'The price we are being forced to accept today is almost identical to the prices we were getting from the old Milk Marketing Board in 1986,' it says. 'We are being destroyed by the constant passing down of price cuts.'
Haresfield Farms goes on the record for the farmers lobby stating 'no evidence does not equal no problem'.

Separately, Freeman has admitted a private equity bid for Sainsbury's could hamper the inquiry's progress. A private equity consortium of CVC, Kohlberg Kravis Roberts, Blackstone and Texas Pacific Group has been given a deadline of April 13 by the Takeover Panel to table an expected 11bn bid. 'If there was a private equity bid, we would obviously want to monitor it' he said.

From The Sunday Times
April 1, 2007
Tesco sets out its stall to regulator
Jenny Davey

TESCO, Britains biggest supermarket chain, will defend its market-leading position to competition regulators tomorrow, arguing that todays shoppers are so price sensitive they will spend up to 30 minutes driving to their chosen grocery chain twice as long as was previously estimated.

The company, which is seeking to prove that the grocery market should be judged as a single national market or series of large interlocking markets rather than a collection of small local markets, argues that even a 5% price increase in grocery prices at a supermarket chain will cause marginal shoppers to switch to a rival.

This has been calculated using an international analytical tool, called the SSNIP test. Tesco claims that customer behaviour in most of its larger supermarket sites can be predicted with this tool. Many grocery markets overlap with one another and the whole country is covered by one or more of them, Tesco says.

It argues that the Competition Commissions approach to geographic market definition has been overly simplistic so far because it refers to the distance most customers are prepared to travel.

The supermarket giant insists that the commission should instead define the market with reference to marginal customers those who are willing to switch between retailers.

Tesco is trying to avoid being forced to sell off stores to rivals by the regulator by proving the market is large, interlocking and competitive. That is because in some local markets it has a market share of more than 50%.

BBC news
Sunday

Tesco has said it would be "surprised" if a competition probe into the UK's supermarkets calls for it to sell off some of the undeveloped sites it owns.
The firm was responding to a Sunday Telegraph article which said the Competition Commission may call for Tesco to give up some of the plots.
Tesco has the largest land development portfolio of all the supermarkets.
The Competition Commission is due to publish its initial findings into the supermarket sector later this month.

According to the Sunday Telegraph, at least two of the Competition Commission's six panel members looking into the supermarket sector want the main companies to give up some of the land they own for further development.
They are said to consider the big "land banks" to be barriers to new players entering the marketplace.
Tesco's executive director Lucy Neville-Rolfe said the company would be surprised if the Competition Commission hurt consumers by "penalising competitive success".
"Tesco's land pipeline reflects our flexible and innovative approach, which goes with the grain of government policy," she said.
"We build stores of different sizes, often in deprived areas and on contaminated land others won't touch and parcel together sites so we can invest in town centres, always taking risks on planning approval."
Tesco is the UK's largest supermarket, with a market share of 30%.
The Competition Commission was unavailable for comment.
The Green Party's principal speaker, Derek Wall, said it was essential that the Competition Commission looked at the development land owned by the main supermarkets.
"With one in eight pounds spent in UK shops contributing to Tesco's profits, it's fatuous to pretend that they'd be surprised if the Competition Commission acts to hinder their monopolies growth," he said.

M&S poaches Tesco fashion boss
Lisa Buckingham & Lauren Mills, Mail on Sunday

In a breathtaking High Street coup, Marks & Spencer has poached Terry Green, head of clothing at Tesco, to head its increasingly successful fashion business.
A well-placed source told Financial Mail that M&S chief executive Stuart Rose had been in talks with Green, a friend and former colleague, for several months.
'They initially met to discuss the job just after Christmas,' said the source. Two further meetings, with M&S senior management, took place more recently.
The loss of Green will be a bitter blow to Tesco boss Sir Terry Leahy. Just last November, Green set out ambitious plans for Tesco to topple High Street fashion giants M&S, Next and Topshop.
He said that Tesco would invest millions of pounds in an expanded range of edgier and upmarket clothing to be sold in specially designated areas within the stores.
Now Rose has poached the 56-year-old fashion industry veteran to help consolidate M&S's position as the country's favourite clothing retailer.
Green, who intends to hand in his notice to Leahy this week, is in Hong Kong, watching a rugby union tournament and was unavailable for comment.
Rose plans to put Green in charge of clothing. He will oversee Kate Bostock, director of womenswear, her menswear counterpart Julian Kilmartin and lingerie director Matthew Hudson. Sources say the move is expected to mean a substantial pay rise for Green.
Rose, who was pipped to the top job at Debenhams by Green when the pair worked together at Burtons in the Nineties, has long been impressed by his former colleague's record at Topshop, Debenhams and, most recently, Tesco.
'M&S plans to introduce some trendier ranges, particularly for young women, to tap into Topshop's success,' said a source, adding that Green's appointment was seen as pivotal to orchestrating the changes.
Green is a consultant at Tesco and not on the main board, so is expected to be able to move to M&S relatively swiftly. He joined the supermarket chain in September 2005, just eight months after presiding over the collapse of department store group Allders with the loss of 1,000 jobs. At the time, many feared it might mean the end of his career at the pinnacle of UK fashion retailing.
But Rose firmly believes Green's troubles are behind him. He wants a trusted lieutenant Tesco chief defects by his side after the departure in February last year of his friend Charles Wilson, who left to join cash-and-carry chain Booker.
M&S has been plagued by rumours of other high-level departures. Andrew Moore, the 49-year-old director of general merchandising, left in February and Anthony Thompson, M&S's retail director, was said to be looking at his options. Thompson, however, has so far been persuaded to stay.

The Scotsman

Tesco Thais up Far East expansion

TESCO, Britain's biggest retailer, is to extend its reach into Thailand with the addition of new hypermarkets and about 60 convenience stores.

The group, which already operates 260 Tesco Lotus convenience outlets, said it would spend just over 100 million on expanding in Thailand this year.

Darmp Sukontasap, a senior executive of Ek-Chai Distribution System, which operates the Tesco Lotus branches, declined to say how many hypermarkets were in the plan, or exactly how much it cost to open a standard 300 square metre Tesco Lotus Express convenience store.

HP- I purchased Tesco shares recently at 437p as a core investment. As you probably know W Buffet purchased an interest as he was impressed with the Management and good future prospects.He may well of had international expansion on his mind when using his 5 year prospect guide. If the market has another period of weakness I will add some more . Thanks for the information.

Final results next Tuesday. Expect more good news.

Telegraph. 15 April 2007
The Week Ahead: Tesco hits the West Coast. by Danny Fortson


Another year, another record for Tesco. At the retailing Goliath's annual results on Tuesday, stockbroker Charles Stanley expects chief executive Sir Terry Leahy to unveil 2.48bn in pre-tax profits, up from 2.23bn the year before.

The company's freight-train growth is not surprising. What the City will be eager to talk about is Tesco's expansion plans abroad, principally in China and the US. The retailer unveiled plans last year to open a chain of Tesco Express-style stores on the West Coast of America, wading into territory that has been a graveyard for most UK retailers that have tried to cross the Atlantic.

But with Warren Buffett, the billionaire US investor, having bought a big chunk of shares last year, it will be hard to bet against the company.

BBC. 17 April.

Britain's biggest retailer Tesco has reported 13% growth in full-year underlying profits of 2.55bn.

Its international strategy is going strongly with 8.2m square feet of new store space creating 18% growth in international sales.

The supermarket chain plans to create 25,000 new jobs worldwide this year.

Although Tesco has been expanding abroad, the lion's share of its profits still came from its UK network of more than 1,400 stores.

Tesco made profits of 139m from its property portfolio and now plans to expand the programme of realising profits from its property.

The company currently holds a 31.2% share of the UK grocery market, according to the latest figures from market researchers TNS.

It unveiled two new measures earlier this month to help increase the price UK dairy farmers receive for their milk.

Tesco also recently announced that its first US store would be based in the state of Arizona, trading under the Fresh & Easy brand.

Amid widespread media interest, the firm opened its first store under its own name in the Chinese capital Beijing in January.

AFX. 18 April


TOKYO (Thomson Financial) - Tesco PLC said it will open its first own-brand mini-supermarket in Japan next week, under the Tesco Express name.

The Tesco Express store will open its doors in Tokyo's Nerima ward on April 25, one of up to 35 new outlets the British supermarket giant plans to open this year in Japan.

Tesco currently operates 106 stores in Japan under the Tsurukame brand.

'The new stores represent the most compact version of the 'Tsurukame Land' food supermarkets we have been running,' said Tesco spokeswoman Shizuko Ota.

'They are not convenience stores. We position them as a small type of food supermarket,' she said.

Unlike many of the roughly 40,000 conveniences stores in Japan that operate round the clock, the new Tesco Express will be open from 7.00 am to 11.00 pm.

Tesco already employs 3,300 people in Japan, where it acquired 78 discount supermarkets, mostly in the Tokyo area, in 2003 through the acquisition of C Two-Network.

From The Times
April 18, 2007

Tesco to use property to enhance shareholder handouts. Sarah Butler


Tesco is set to cash in on the booming retail property market, with plans to refinance up to 2 billion more of its property portfolio than planned over the next five years and to double the amount returned to shareholders to 3 billion.
The move by Britains largest supermarket is likely to increase pressure on Sainsburys to refinance its property portfolio, a move for which Robert Tchenguiz, its minority shareholder, has been lobbying since the collapse of a 10 billion private equity bid.
One analyst said: This shows the strategic value of property assets.
Sir Terry Leahy, the Tesco chief, said: It is important to strike the right balance between returns today and value for future shareholders.
He said that Tesco wanted to keep the freehold on at least 70 per cent of its properties, so as to maintain long-term strategic strength. However, it had tried to show some of the hidden value within its portfolio by pointing out that its property was worth about 28 billion, 65 per cent more than the 17 billion registered in the supermarkets books.
A year ago Tesco announced plans to raise 5 billion through refinancing of its property assets, and to return 1.5 billion of that to shareholders.
Sir Terry said: Its a substantial store of value and its appropriate we release some of that.
He would not say whether any of the money raised through additional property sales would be invested in the company or exactly how much would be raised; this, he said, would depend on market conditions.
However, Andrew Higginson, the finance director, said that Tesco was not likely to raise more than about 2 billion more over its current five-year programme.
Tesco yesterday confirmed its strength with a 10.9 per cent rise in sales to 46.6 billion and a 13.2 per cent rise in underlying profit to 2.54 billion.
The supermarket also revealed a 5.8 per cent rise in underlying sales, slightly better than expected and up from the 4.4 per cent of the previous quarter. The supermarket said that growth was down to consumers spending more of their total cash on food.
Sir Terry said: I think we are seeing a fundamental change in consumer interest in food based on health.
He said that the number of customers buying at least some organic food had risen by a third to more than 40 per cent and that Tescos sales of these foods was now approaching 1 billion annually. Tesco also revealed strong sales of nonfood. In the UK alone, such sales rose by 11.6 per cent to 7.6 billion, including a 16 per cent rise in clothing sales. Consumer electronics rose by 35 per cent, helped by the launch of Tesco Direct.
Internationally, the supermarket showed stronger-than-expected growth despite continuing problems in Hungary, Thailand and South Korea.
Some analysts expressed disappointment that Tesco expected a loss of 65 million this year at its American business, which is expected to be launched this autumn. In the past year the venture cost Tesco about 20 million.
However, Sir Terry said that the start-up losses were in line with the companys strategy. The US is clearly an enormous part of the worlds spending power and a market you can grow in if you have something successful, he said. There is no shortage of retail space there, five times the amount per head then in the UK.


Petrol payout

Tesco said that it had paid 7 million to 8 million to compensate thousands of drivers whose cars were damaged by contaminated petrol sold in its forecourts. It said that it had settled 15,000 of 18,000 complaints made about the incident in February. Petrol from the Royal Vopak terminal at Thurrock used by a Tesco supplier was found to be contaminated with silicon.
Sir Terry Leahy, Tescos chief executive, said of the settlements: I think we have done a good job. The final cost was not yet clear because both Tesco and its supplier were still dealing with their insurers, he said.

From The Times
April 18, 2007

Shop smart: Tescos price may seem high, but its all relative. Robert Cole: Tempus


Tesco shares look expensive. But does that mean the stock should be sold? In a word, no.
Tesco shares trade on a historic price-to-earnings ratio of 21. This looks heady by almost all standards, and is certainly a long way ahead of the average London-listed share. The typical FTSE stock trades on an historic earnings multiple of 14. Dividend yield statistics paint a similar picture. Tesco shares give 1.96 per cent compared with a FTSE average of 2.76 per cent.
But as long as Tesco continues to produce financial results like the ones it posted yesterday, the shares will not actually be expensive, they will simply look expensive. They will only become expensive if, or when, momentum begins to leak away from the profits growth.
One oddity is that, while Tesco shares look pricey by most benchmarks, they appear cheap when set beside their closest peers. Shares in the FTSE food and drug retailing sector change hands at a whopping 30 times historic earnings and give a dividend yield of 1.9 per cent.
Takeover bid fever accounts for the super-premium rating of Tescos immediate peers. Peers trade on unusually generous ratings: the average historic price-to-earnings ratio for the food and drug retailing sector over the past ten years is one-third less than it is at present. But at Tesco, its price-to-earnings rating is more or less in line with the ten-year average. So, if shares in Tesco are expensive, it only reflects the prevailing conditions of the past decade.
If something does go wrong, the share-price reaction could be brutal, since the stock would be hit by the double-whammy of falling profits and a falling rating. But what could go wrong? There are three key risks. The first is that customers in Tescos domestic UK market will turn against the company, either directly or through the proxy of the competition authorities. The second is that Tesco will get into trouble on the international side. The third is that the management team, led in exemplary fashion by Sir Terry Leahy, the chief executive, somehow loses its thread. It is alarmingly easy to see Tesco come a cropper at the hands of each of these. And it is not that hard to imagine all three arriving in tandem. But the key consideration is that, while it is possible to imagine that Tesco might endure a reversal in fortunes, there is little evidence that it is running into serious difficulty.
The fuel fiasco earlier this year created a headache. Some of Tescos fledgeling international ventures are loss-making, too. As Tesco gets progressively larger in the UK, growth will get harder to come by. But the difficulties pale in significance beside the bigger story, which is that Tescos success continues to outweigh by far its failures. Yesterdays decision to double the share buyback programme is one sure sign of the success.

Buy.

The Herald. PAUL ROGERSON, City Editor. April 18 2007

High streets juggernaut rolls onward


Supermarket juggernaut Tesco said yesterday it planned to increase the number of its Scottish scores to more than 100 this year, as it underlined its dominance of the UK retail market with another set of record results.
Planning consent has been obtained for five more outlets - at Maryhill in Glasgow, Port Glasgow, Lockerbie, Buckie in Banffshire, and North Berwick.
Up to 1000 jobs are expected to be created north of the border in the next 12 months, the company said. These will be added to the 1200 Scottish posts Tesco said it created in 2006/07, when the company opened five shops in Scotland.
Tesco owns some 2000 stores in 13 countries, including 1500 in the UK, where it employs 260,000 people.
Group sales rose 10.9% to 46.6bn in the year to February 24, broadly in line with analyst expectations. Underlying profit rose 13.2% to 2.55bn, while UK trading profits were 1.91bn - 9.2% ahead of the previous year.
The full-year dividend was raised by 11.7% to 9.64p per share.
The company also announced a doubling in the amount of cash it plans to return to shareholders, pledging to return at least 3bn from property sales to investors, up from 1.5bn previously.

Chief executive Terry Leahy brushed aside criticism about the group's dominance in the UK, where Tesco controls more than a third of the grocery market, describing the company as a "significant British success story". This did not spare the company from the critical flak it generally receives at results time, however.
Danny Alexander, the LibDem MP for Inverness, where Tesco has a 51% market share, said: "Tesco's enormous profits underscore the need for the Competition Commission to propose tough action to curb the dominance of supermarkets in local markets such as Inverness.
"Local dominance has a negative impact on smaller shops, on suppliers and, ultimately, on consumers. As competition falls away, so the power of the dominant player increases."
The commission is investigating the UK's 95bn grocery sector after the Office of Fair Trading found evidence to suggest some supermarket chains were using large land banks to stop rival retailers opening outlets.
Friends of the Earth campaigner Vicki Hird accused the chain of "driving high street stores out of existence".
She said: "The time has come to put the brakes on the Tesco juggernaut and curb its power."

Tesco appears to be coping well with a growing challenge from nearest rivals Asda and a resurgent J Sainsbury.
Like-for-like UK sales, excluding fuel, rose 5.8% in the final quarter of the year. This was an improvement on a third-quarter rise of 5.6%.
Strong fourth-quarter growth at home allayed fears Tesco is losing ground to those rivals, Seymour Pierce analyst Richard Ratner said.
Leahy said Tesco's much-heralded entry into the US, its biggest forecast foray this year after opening its first own-brand stores in China in 2006, is on track. He reiterated the company's plans to break even in the US in its third financial year of operation.

Richard Hunter, head of UK equities at Hargreaves Lansdown Stockbrokers, said: "It certainly seems as though the world is Tesco's oyster at the moment. Without taking its eyes off the core UK market - where all the key performance indicators continue their inexorable growth - the success of its international division continues apace."

AFX. 19 April

Tesco plans Guangzhou HQ to boost south China expansion - report


BEIJING (XFN-ASIA) - UK retailer Tesco PLC has set up a regional headquarters in Guangzhou, to help boost the group's presence in southern China, the China Business News reported, citing a company source.

The group already has three stores in south China, out of a total of 47 in the country, the newspaper reported.

Tesco entered China by acquiring a 90 pct stake in Hymall, a grocery brand formerly run by Taiwan's Ting Hsin International Group.

Just a reminder that we go ex-dividend next Wednesday (25th April).

Dividend payout is 6.83pence per share.

Food retailers safe bets as pound gains

LONDON (Reuters) - Shares in food retailers are safe bets for investors worried by the prospect of sterling above $2, analysts say.

The Scotsman. April 21st.

Theory suggests we're heading for a depression

ON 13 March 2003, the FTSE All-Share index hit 1,676.6, the IT-driven peaks of three years before a distant and frustrating memory. Just a few days ago this key benchmark broke through to more than 3,380, a rise of 100 per cent. True, this advance has not been without interruption, punctuated, in fact, by two particularly sharp corrections, in May last year and February this year, but these were as short-lived as that most spectacular of all "panics" in recent memory, that of October 1987. To an extent, market trends are the source rather than as the result of opinion, extending onwards until reality is suspended, at which point, like that cartoon Coyote suspended over the canyon pedalling furiously, a glance below triggers nemesis.

Although I am no chartist, the structure of a market often follows a distinct pattern, an initial sharp reaction followed by an equally robust change in direction, which persuades the majority that the original trend has been re-established and then a more sustained secondary pattern which, in turn, carries the conviction of permanence. In truth, there are two fundamental aspects of any market trend. One is the belief by the majority that "this time is different" and two, that it is not. In fact, the phrase "this time is different" is almost as depressing as Evelyn Waugh's dislike of "red or white?" or "shall we go straight in?" Personally, I suffer a serious nervous reaction to the news from my IT department that "we have upgraded your systems".

The trouble with cycles is that one is never very sure when they started and, as a result, they can only really be judged retrospectively. In 1923, Joseph Kitchen announced his discovery of a 41-month cycle, while the French economist Clement Juglar, who died in 1905, identified a seven to 11-year business evolution. Perhaps the most famous was the Kondratieff theory on wave cycle, "discovered" by the Russian Professor Nikolai Kondratieff and whose cycles are supposed to last anything between 45 to 60 years. Prof Kondratieff helped to develop the first post-revolutionary Soviet five-year plan. In his findings, he suggested that there were four distinct phases: beneficial inflation; stagflation; beneficial deflation and deflation. Unfortunately - for him - his work and conclusions were seen as a criticism of Joseph Stalin and he ended up dying in a gulag in 1938. Based on his theories, however, there was a period of beneficial inflation between 1949 to 1966, stagflation between 1966 and 1982, and beneficial deflation between 1982 and 2000.

We are now in that fourth stage, a deflation cycle which should lead to a depression. Prof Kondratieff was building on the premise promoted by Juglar, who suggested that growth periods usually ended in a spectacular collapse of the proverbial bubble, with the consequential need of a purging of the system to restore reason.

It seems to me that we are depressingly close to just such a climax, depressing, that is, for one who makes a living out of investment markets; as Butch Cassidy said to the Sundance Kid: "You know kid, for a gun fighter you're a helluva pessimist!" The human condition is prone to irrational enthusiasm, which can overwhelm anything from a playground to a lynch mob. Peering into the investment market pond today suggests that the entire piscatorial shoal is engaged in a cycle of mutual ingestation, which can only lead to an acute attack of indigestion. I am not saying there are no investment opportunities to be had but, when you have central bankers still obsessed by inflationary pressures which are as much as anything else a consequence of political initiatives or acts of the Almighty - high oil prices (Iraq and tax) - high food prices (hot weather) - and not from avaricious wage demands or spectacular speculative consumption binges, then there are problems on the horizon for us all, and especially for those who succumb to banks lending mortgages on an income multiple of six.

As Euripides said: "Whom the Gods would destroy, they first make mad."

Bryan Johnston is a director of Bell Lawrie in Edinburgh.

The Herald. 30 April
PAUL ROGERSON, City Editor

SNP says Tesco Law is not suited to Scottish society

SNP justice spokesman Kenny MacAskill has said the party will not seek to introduce so-called "Tesco Law" north of the border, should it take power at Holyrood.

He was commenting on the party's policies towards the legal profession, which are broadly outlined in its election manifesto.

South of the border, of course, external investors such as supermarkets and banks are being allowed to own and run law firms for the first time. Practices will also be able to float and appoint non-lawyer partners, and English barristers and solicitors will be able to form partnerships.

"MacClementi", a working party report on Scotland's legal services market commissioned by the Scottish Executive and published early last year, was widely viewed as a damp squib in respect of opening up the market to greater competition. This has split the profession, with some eminent lawyers in favour of the new freedoms and others hostile.

Asked if he would seek to legislate to allow any or all of the freedoms enshrined under the general term "Tesco Law", MacAskill responded: "Further investigation is needed. Tesco Law is to be avoided as it would not suit Scottish society. However, some opportunity for successful Scottish firms to compete globally is appropriate."

MacAskill did give a commitment to implement fully reforms scrapping self-regulation enshrined in the recently passed Legal Profession and Legal Aid (Scotland) Bill, including the creation of an independent Scottish Legal Complaints Commission to address complaints of poor service by lawyers.

Some consumers have expressed concern about his commitment to that cause, since he himself is a qualified solicitor and was a partner in an Edinburgh law firm until 2000.

Asked if the SNP was committed to the full implementation of the bill as recently passed by parliament, however, MacAskill answered with a simple "yes". He said he has no plans to alter any aspect of the reforms. The SNP is taking a cautious line on the vexed issue of Scotland's shockingly low threshold for small claims. It is now nine years since it was recommended that the limit be lifted to 1500 from 750, but nothing has been done.

Scottish consumer groups continue to despair that for people wanting compensation from a supplier of shoddy goods or services without the expense of hiring a lawyer, the effective maximum is 750 - less than the cost of a plasma TV. That limit has been frozen for 19 years, whereas in England and Wales the small claims ceiling is 5000 and has been since 1999.

According to consumer organisation Which?, some despairing Scots who can do so, choose to pursue their cases in the English courts. Julia Clarke, public affairs officer for Which? in Scotland, has described the Executive's failure to act as a "charter for cowboys".

Personal injury claims are to be excluded from increases in the small claims threshold if and when the Executive does act. That much is clear.

Opponents of higher limits, however, which include trade unions, allege that more radical action would deny legal redress to thousands of Scots by taking them out of the legal aid net.

Others make dark allegations of protectionism, stressing that a rise would enable more people to go to court without having to pay a solicitor. Asked if the SNP will be increasing the small claims limit and, if so, to what level and when, MacAskill responded: "A root-and-branch reform is needed for a system unfit for 21st century society.

"The protection of those pursuing personal injury claims must be assured.

However, a faster and more streamlined system must be available for minor consumer and other small claims."