Sainsbury's takes price comparison battle with Tesco to high court
Sainsbury's takes price comparison battle with Tesco to high court (Reuters) Reuters

J Sainsbury, the UK's third-largest supermarket firm, proposes to take its battle over price comparisons with the nation's largest grocer, Tesco, to Britain's high court.

Sainsbury's will request a judicial review after Britain's advertising watchdog the Advertising Standards Authority (ASA) ruled twice in Tesco's favour.

The London-headquartered firm expects a hearing in the summer of 2014, when it could table several examples of what it considers to be unfair product comparisons.

The bone of contention is Tesco's "Price Promise" promotional campaign, which compares the price of goods and refunds the difference if comparable goods are priced lower in a rival supermarket.

However, Sainsbury's claims that the Tesco promotion is misleading customers because it fails to consider differences between Tesco and Sainsbury's own-brand products when making such comparisons.

"This is a point of principle," said commercial director Mike Coupe.

"We do not believe it is fair or reasonable to compare own label products because almost by definition they come from different sources," Coupe said, adding that Sainsbury's has the backing of partner organisations such as Fairtrade, the Forest Stewardship Council (FSC), the Marine Stewardship Council (MSC), and animal welfare charity the RSPCA.

Tesco dismissed Sainsbury's planned legal move.

"Sainsbury's argument against Price Promise has been heard and rejected twice already," said Tesco's UK marketing director David Wood.

"When family budgets are under pressure, that is the kind of help customers want and the real question for Sainsbury's is why they aren't trying to do the same for their customers?" Wood added.

Tesco rolled out 'Price Promise' in March, comparing its prices with those from Asda, Morrisons and Sainsbury's

Sainsbury's "Brand Match" campaign compares the prices of branded products only.

Tesco overtook Sainsbury's as the UK's top retailer in 1995. Tesco issued its first profit warning in over two decades in January 2012.

By comparison, Sainsbury has reported 35 successive quarters of like-for-like sales growth, according to Reuters.

Competitive Market

The big four supermarkets are under pressure as prices become less of a differentiator for shoppers, according to research from Kantar Worldpanel.

Kantar's grocery share figures for the 12 weeks ending 15 September, 2013, which revealed the purchasing habits of 30,000 households in Great Britain, found that Sainsbury's is the only big four grocer to increase its market share over the past year. It grew from 16.4% to 16.6% and recorded a market-beating growth of 5.1%.

But the other big retailers have all lost market share over the past year, although Asda is ahead of Tesco and Morrisons in terms of its year-on-year sales growth, which stands at 2.4%.

In contrast, Aldi had 32.7% year-on-year sales increases and Lidl and Waitrose also performed well with respective growth rates of 14.3% and 9.7%.