Morrisons wins right to bid for Safeway
WM Morrisons, the northern retail group, has won the coveted right to purchase the Safeway supermarket chain, after Trade and Industry Secretary Patricia Hewitt accepted the findings of the Competition Commission.
Bids from rivals Wal-Mart’s Asda, Sainsbury’s and Tesco were rejected on the grounds that the retailer would be granted unfair dominance in the sector as a result.
A bid by retail entrepreneur Philip Green and financial buyers was also turned down. Mr Green, the owner of Bhs, had been granted permission to make a bid without undergoing the scrutiny of the competition authorities.
Analysts forecasted that Morrison would be given the green light as an enlarged Morrisons would create a fourth national player to compete with the other three main players.
Morrisons is ranked fifth in the hierarchy of supermarkets and its stores are predominately in the north. Safeway stores are found predominately in the south of England and in Scotland. The merger will give Morrisons a national presence.
But Mrs Hewitt said Morrisons would have to sell 53 of its stores in several local areas to meet public interest criteria before it could go ahead with the near-3 billion pounds bid.
The Office of Fair Trading will oversee the sale of the stores.
Mrs Hewitt said the sale of Safeway to Asda, Sainsbury’s or Tesco would be contrary to the public interest at both the local and national level.
The decision wraps up the five-month competition inquiry.
Phil Evans, principal policy adviser at the Consumers’ Association, said the merger would be “good news for shoppers.”
“We continue to believe that the best option for Britain’s consumers lies in a strengthened fourth player boosted by national coverage and aggressive price competition,” he said.
Competition Commission Chairman Sir Derek Morris commented: ‘I am pleased that our report and recommendations have been accepted in full. If Morrisons are successful with their bid for Safeway we would expect them to become a strong national player.’
