Wide ranging inquiry into UK supermarket sector
Competition Commission sets out Safeway issues
May 8 2003
The Competition Commission is using its inquiry into the potential bidders for Safeway to take a wide ranging look at the UK supermarket sector.
Issues including consumer choice, the effect on the convenience store sector and non food sales are all possible factors in considering a takover of the UK’s fourth-biggest supermarket chain by Tesco, Asda, Sainsbury’s and Morrisons.
An issues letter setting out the scope of the inquiry has been sent to the supermarkets and interested parties, with the Commission asking for written responses by May 14. A statement said that “analysis of these issues – and any others which may be identified as the inquiry proceeds – will help the Commission reach conclusions on the question of whether any of the four potential mergers might be expected to operate against the public interest.”
Among the issues flagged up by the commission are whether it should simply consider the grocery market, or also look at the increasing range of non-food products sold by large supermarkets; Whether the inquiry should only look at ‘one-stop’ grocery shopping in larger supermarkets, or take in other sectors including convenience stores; and how Internet home shopping affects the market.
The letter also asks whether the ‘drive time’ measure of local competition used in the 2000 inquiry into supermarket monopolies is still appropriate. Analysis based on consumer behaviour, population, the number of fascias in a locality, and market share data could also be taken into account, suggests the commission.
The commission will consider whether any of the mergers would result in higher local prices for groceries, petrol or other products, or reduced choice. The inquiry will also consider whether a merger would prevent a new multiple grocery retailer to enter a local market, or the ability of an existing grocery retailer to grow. Morrisons, the fifth biggest operator, has suggested that this should be a key consideration.
On a national level, the commission will consider issues such as the total number of fascias and overall market share, as well as, once again, any implications for price, consumer choice, and restriction on other operators to either enter the market of grow their store chain.
The effect of a concentration of buying power on suppliers and consumers will also be taken into account.
