Monopsony Power & the UK Grocery Industry | Edexcel Essay Plan

This Edexcel essay plan looks at the monopsony power of the supermarkets.

Major UK supermarkets—Tesco, Sainsbury’s, Asda, and Morrisons—control around 66% of grocery market share. This gives them significant monopsony power—they are dominant buyers able to pressure suppliers like farmers and food manufacturers.

In 2023, the Groceries Code Adjudicator found several cases where suppliers were paid below production cost, raising concerns about fairness and efficiency in the food supply chain.

In theory, monopsony power leads to lower prices for suppliers—sometimes below their average variable cost. This can force smaller producers, such as dairy farmers paid less than 30p per litre, toward their shut-down point.