February 27, 2007
Supermarket Mergers: A UK Perspective
Posted by D. Daniel Sokol
I have posted a few times in the last few weeks on the US supermarket industry. Excitement about supermarkets is not limited to the United States. Reuters reports that WalMart, the UK's #2 supermarket may bid for the #3 player, Sainsbury. See the story here. Just recently, the British Competition Commission released an interim report on supermarket antitrust issues. I don't know UK competition law well enough to place any bets on such a proposed merger going through, but in the US mergers that change the number of players from 4 to 3 generally do not present serious antitrust concerns.
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The interim report was from the Competition Commission, not the Office of Fair Trading (the link seems right though). As regards a Wal mart bid, in 2003 the Competition Commission said this: "At the national level, we found that the change in market dynamics brought about by the acquisition of Safeway by any of Asda, Sainsbury’s or Tesco might be expected, given the conditions facilitating coordinated behaviour, over time to lead to such coordinated behaviour as we describe in paragraph 1.12. We do not, therefore, expect that, following the acquisition of Safeway by any of these grocery retailers, effective competition would be maintained and promoted in the UK one-stop shopping market." Different context, admittedly.
The link is here: http://www.competition-commission.org.uk/inquiries/completed/2003/safeway/index.htm
Posted by: Cosmo Graham | Feb 27, 2007 7:26:05 AM
Thanks Cosmo for the correction. I should also point out for our readers that there is quite a bit of academic work in the UK on supermarket issues. I am most familiar with the work of Paul Dobson but there are others.
Posted by: D. Daniel Sokol | Feb 27, 2007 7:38:10 AM