Outlook To close observers of the supermarket sector, the plea made yesterday by the Association of Convenience Stores will have a familiar ring. Noting that Tesco is buying up another bunch of local shops via its One Stopsubsidiary, it called for the Office of Fair Trading to investigate the deal on competition grounds.
However, while previous appeals have fallen on deaf ears – or at least failed to stop the Tesco juggernaut – the ACS might just find itself pushing at an open door this time, though not because this particular deal is necessarily more deserving of an inquiry from the competition authorities.
In recent months, the Office of Fair Trading has become noticeably more active in the M&A market. Its decision earlier this month to ask the European Commission to pass it the Thomas Cook merger with the Co-op travel agency business – a request that is likely to be granted – is just the latest in a string of interventions. To name but the most recent examples: Travis Perkins was forced to make disposals in its merger with BSS, while the merger of Streetcar and Zipcar was referred to the Competition Commission. So was the sale by Johnson Matthey of a unit, with the deal then called off.
It may be that the unusually high activity rate at the OFT simply reflects the fact that a larger number of deals requiring investigation have come along during the second half. But one can't help wondering about an alternative explanation: the shifting political sands.
In opposition, Vince Cable, the Business Secretary, and Ed Davey, one of his junior ministers, were frequently critical of the competition authorities' failure tointervene in more takeovers and mergers. Since coming to power, Mr Cable has decided not to reinstate the public interest test that used to be a feature of the legislative framework governing M&A. But the Government is pressing ahead with plans to merge the OFT and the Competition Commission – there is a consultation document doing the rounds on the proposal, but it is a done deal.
That was seen as a victory for the OFT, which was keener on a merger than the Commission. Since then, however, the gossip has been that the OFT is doing less well – that it is losing out to the Commission in the negotiations over who should be responsible for what in the combined organisation.
Could it be that the OFT's senior management now feels obliged to play to the ministers in the gallery at this delicate moment? If so, the ACS would be wise to press its case promptly and purposefully for a referral of One Stop's purchase yesterday of Mills Stores. It may get a result this time.Reuse content