The competition authorities' torrent of actions against the power of the supermarkets gathered pace today with plans to combat the phenomenon of "Tescotowns" where one supermarket dominates a region.

In its final report into the groceries market, the Competition Commission confirmed there would be a new test in the planning process for new stores. This would consider how many shops the company planning a new opening already had in the area before granting approval.

It would replace the current system, which does not take into account the identity of the retailer, only considering in general terms whether there is demand for a new supermarket.

Overall, Commission chairman Peter Freeman concluded competition was working fairly well, even for small independent shops.

"Competing with large retailers is difficult but our evidence does not show that independent retailers or the wholesalers that supply them are in terminal decline," he said.

The Commission will bolster support for suppliers feeling unfairly squeezed by the supermarket giants.

The current system where the Office of Fair Trading oversees the supplier-supermarket relationship will be overhauled, with the creation of a new ombudsman to arbitrate and monitor the market.

Supermarkets will also no longer be allowed to insist on being the only one allowed when they help fund new town centre developments.

Supermarkets claim they need such deals, generally for around three years, to justify investing millions of pounds in redevelopment projects. Tesco's backing of revamps at Woolwich and Beckton are often cited as examples. But the Commission concludes they harm competition.