Blocked rivals put brave face on Safeway ruling
Supermarket giants gear up to take on expanded Morrisons
September 26 2003
The big three UK supermarket operators are preparing to compete with an expanded Morrisons chain after being blocked from acquiring the Safeway business.
Tesco, Asda and Sainsbury’s will all be allowed to acquire certain of the 53 stores which Morrisons has been ordered to sell off, depending on crossover with existing stores. Tesco has been cleared to acquire 21, Sainsbury’s 20, and Asda, which has the biggest geographical crossover with Morrisons, could buy 12.
After those disposals, a combined Morrisons and Safeway would operate around 550 stores. Its value-for-money offer more closely resembles that of Tesco and Asda, and like Sainsbury’s, Morrison has upped its non-food ranges recently.
Responding to the ruling, Tesco chief executive Sir Terry Leahy, said: “Although we are disappointed that we are not able to offer Safeway shoppers the same fantastic experience we try to give our 12 million customers in our stores every week, we are not entirely surprised by the Government’s decision. It is in line with the statements released by the Competition Commission as part of its inquiry, which suggested that a tough view would be taken on consolidation.
“However, as the UK’s leading supermarket we thrive on competition. Our recent results, our moves to bring new competition to the telecoms sector and our latest round of price cuts show that we continue to provide the best value for customers. We have a strong strategy for growth in food, non-food, retail services and overseas which we look forward to continuing.’
Asda chief executive Tony DeNunzio said: “Naturally we’re disappointed with this decision. So, I am sure, are all the shoppers who were hoping to have an Asda near them.
“We will press on with our plans to grow the business and expand our store network and I know the 124,000 great colleagues who work at ASDA are geared up to deliver a fantastic Christmas for our customers.”
Sainsbury’s group chief executive Peter Davis said: “We are disappointed with this outcome. However, we are encouraged that we have the chance to bid for some of the stores that Morrison’s is required to divest and believe we are well placed to bid for a worthwhile number of these stores.
“The Competition Commission’s report is a significant document comprising five hundred pages and we will reflect on its detailed content.”
