Government offers scope for more Safeway store sales
Way cleared for Morrisons takeover
November 12 2003
A government clarification over sales of further Safeway stores to the ‘big three’ supermarket operators offers more scope than originally thought.
The announcement by trade secretary Patricia Hewitt is designed to speed up the Morrisons takeover of Safeway, and reduces the chance of Tesco, Asda or Sainsbury’s applying for a judicial review of the government’s ruling on bids for Safeway.
When the government blocked the ‘big three’ from bidding for Safeway in September, it asked them to sign up undertakings which would preventing the retailers buying ‘any part’ of Safeway, other than the stores specifically earmarked for disposal in order for Morrisons bid to proceed.
Safeway and the other supermarkets have raised concerns that the undertaking are too restrictive, and some have hesitated over agreeing to them. Bhs and Arcadia owner Philip Green also indicated that the restrictions were a factor in his decision to drop his potential bid for Safeway.
In a statement, the DTI said: “It has become clear that there is some speculation over the exact scope of the prohibition undertakings required.”
As a result, Hewitt “has concluded that she should make a further comment on what, in the light of the Competition Commission’s report, she considers this to be in order to minimise market uncertainty.”
The ban would exclude deals approved in advance by the Office of Fair Trading. Only assets which would harm competition in the sector would be covered, including stores, distribution depots or development sites.
The wording indicates that sales of individual stores, relatively commonplace among supermarket operators, would not be covered. It would be for the OFT to show that a store sale would affect competition.
The timetable for Morrisons to launch a revised bid for Safeway only starts when the undertakings have been signed.
