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Commission broadens scope of Safeway bid inquiry

Nigel Cope,City Editor
Thursday 01 May 2003 00:00 BST
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The competition Commission yesterday indicated that it would broaden the scope of its investigation into the supermarket bids for Safeway to include non-food ranges and smaller stores. The Commission also said it would not focus on price to the exclusion of choice, particularly in food ranges.

Speaking after an open hearing to discuss four of the bids for Safeway, Sir Derek Morris, chairman of the Competition Commission, indicated that its 2000 report into the supermarket sector would not necessarily provide the blueprint for the decision on the Safeway bids from Tesco, Asda, J Sainsbury and William Morrison. "Most of the data was 1999 data, which is four years ago," he said. "I'm not sure we can just read across from that report to this time."

The comments came after a four-hour meeting to discuss the relative merits of the four bids which have been referred to the commission. The indicative bid from the retail entrepreneur Philip Green was not referred.

The meeting showed significant support for the Morrisons bid from unions, suppliers and independent supermarket operators. They all expressed concern that the bids from Tesco, J Sainsbury and Asda would give the "Big Three" too much power.

John Hannett, the deputy general secretary of the 320,000-member Union of Shop, Distributive and Allied Workers, said: "The acquisition of Safeway by Morrison would produce an appropriate body and significant retailer capable of challenging the Big Three." It "would give customers and suppliers a real fourth choice", he said.

Phil Evans, principal policy adviser at the Consumers' Association, said he favoured having four large food retailers. "It's better to have more than three," he told the meeting. The chief executives of all the bidding companies addressed the audience. Sir Terry Leahy from Tesco and Sir Peter Davis from Sainsbury's were seen as having made strong presentations even though their cases are perceived as relatively weak. Tesco said its bid for Safeway would create 5,000 new jobs, if it was successful.

Morrisons, represented by Sir Ken Morrison and the joint managing director Bob Stott, made a compelling case. But the two speeches by Tony DeNunzio, head of Asda, were seen as disappointing.

Sir Peter said he doubted Safeway could remain independent whatever the outcome of the regulatory process. "I'm not sure it would be possible to put Safeway back in its box after this process," he said. "We may have to look at whether some sort of combination or break-up would be better."

Sir Derek defended the composition of the Commission's investigating panel which includes no women. Asked why this was the case when they do most of the grocery shopping, he said: "I do the shopping every week." Asked where he indicated that he shops at several different stores: "I'm not going to say but I'm a bit of a tart in that way," he said.

The Commission intends to produce an "issues" statement by mid-May and report its final findings by 12 August.

So where do you shop, Mr Chairman?

Q. Why are there no women on the panel when women do most of the supermarket shopping?
A. Sir Derek Morris, Competition Commission chairman: "I do the shopping every week."

Q. Where?
A. Sir Derek: "I'm not going to say where, but I'm a bit of a tart in that way.

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