DTI takes delivery of supermarket bidding war report

The Competition Commission set the clock ticking on the next phase of the bid battle for supermarket chain Safeway yesterday when it delivered its delayed report on the four referred bids to the Department of Trade and Industry.

The report was submitted yesterday afternoon after the Commission had sought a six day extension to its original timetable to allow final consideration of the competing offers.

The report, which studies the bids by William Morrison, Asda, Tesco and J Sainsbury, will be reviewed by Patricia Hewitt, the Secretary of State for Trade and Industry, although she is on holiday until the end of the month.

The DTI is expected to report its recommendations by the end of next month,but there is no fixed deadline.

Analysts expect the Morrisons merger proposal to be waved through with the other bids blocked.

The bid from Philip Green, retail entrepreneur and boss of clothes retail group Arcadia, was not referred as he has no interests in the food sector so he is free to bid at any time.

Any bidder that is cleared will have 21 days to make a formal offer. Other parties then have 50 days to declare counter-bids.

Asda mounted a last-ditch campaign last week to persuade the competition authorities to give it the green light to swallow Safeway. It said it was willing to sell 100 of Safeway's largest stores if its offer was successful.

"It will be interesting to see how much lobbying they try and do between now and September," one analyst said.

"I'm sure they will be pulling out all the stops."

However, another analyst said: "There will be an almighty hooha if they block Tesco and Sainsbury's but clear Asda.

"People will cry 'foul' and ask whether there has been political interference."

The battle for control of Safeway has already dragged on for seven months having started in mid-January. The contest has had a damaging effect on sales at the supermarket chain, which has been losing market share to rivals, particularly Tesco and Asda.

Asda has already overtaken Sainsbury's to become Britain's second-largest supermarket group but the Wal-Mart owned company made no attempt to make capital out of the change, possibly for fear of deterring the competition authorities.

Supporters of the bid by Morrisons say the company's store network, based predominantly in the north of England, would be a better fit with Safeway's business, which is particularly strong in southern England and Scotland.