Supermarket suppliers back Morrisons bid for Safeway
Concern over buying power may tip the balance
August 9 2003
Suppliers have sent a clear message to the UK Competition Commission that they want to see Morrisons take over rival supermarket chain Safeway.
Polls carried out for the commission as it weighs the merits of the four supermarket operators hoping to acquire Safeway show that suppliers overwhelmingly support Morrison’s bid, according to a report in the Times newspaper.
A survey of more than 1000 small suppliers was conducted by market research group NOP, and the commission has also conducted a separate survey of 84 major suppliers including Unilever, Mars and Procter & Gamble.
The findings are said to show that suppliers support the bid from Morrisons, which would keep four strong operators in the UK supermarket sector, over potential rival bids from Tesco, Asda and Sainsbury’s. Suppliers were concerned about any increase in the buying power of the three largest operators.
With the commission due to present its report to Trade and Industry Secretary Patricia Hewitt next week, the survey findings add weight to the theory that a Morrisons takeover is likely to be cleared with minimal store disposals ordered.
The Bradford-based chain, currently number five in the market, has been understood to be the DTI’s preferred buyer ever since the current process began when Morrisons agreed a takeover of Safeway in January. The fears expressed by suppliers lend weight to Morrisons’ argument that it is the best placed to preserve competition in the sector.
