The OFT has referred Tesco, Asda, Sainsbury's and Morrisons to the Competition Commission for an inquiry into the effect on consumers of their dominance of the grocery market.
The decision comes more than a year after a coalition of voluntary bodies, including Friends of the Earth, the Women's Institute and farmers' pressure group Farm asked the OFT to launch an inquiry. The office initially maintained that supermarkets did not have a case to answer, but has revised its position after a legal challenge by the Association of Convenience Stores, backed by Friends of the Earth.
Fay Mansell, chair of the National Federation of Women's Institutes, said: "We are calling on the OFT and the Competition Commission to ensure that they take into account the devastating impact the supermarkets' current buying practices can have on suppliers, farmers, workers and producers, both in the UK and overseas."
But Friends of the Earth criticised the OFT for not considering the issue of the supermarkets' move into non-food markets and its impact on suppliers.