The food retailing community has reacted swiftly to the announcement of Tesco’s £53.7 million cash bid for Adminstore, calling for a full Office of Fair Trading (OFT) competition enquiry.
Most of today’s daily newspapers believe that the acquisition will be referred to the OFT, although Tesco is confident that the distinction between the supermarket sector and convenience store market, made in the Competition Commission enquiry into the Safeway takeover, is in their favour.
The concern is that the acquisition of the group, which owns the Cullens, Europa and Harts chains would leave Tesco in a position to abuse its strength in the retail marketplace.
Tesco had argued when making its statement that it would have less than six per cent of the convenience store sector, even after the purchase of Adminstore.
However, David Rae at the Association of Convenience Stores said: “The OFT has to consider this acquisition in the context of Tesco’s 26 per cent share of the grocery market and refer the takeover for full investigation by the Competition Commission.
“It is no longer acceptable for the competition authorities to ignore the impact of the supermarket giant’s encroachment into the neighbourhood shopping sector.”
Tesco also came under fire from Bill Grimsey, chief executive of the Big Food Group, who called on the Competition Commission to re-evaluate its stance on supermarkets and convenience stores operating in separate markets. Tesco’s purchase of 870 T&S store in 2002 was allowed to go ahead on this basis, but in today’s Times Grimsey accused Tesco of “exploiting the flawed “two-market” definition to make acquisitions that are not in the interest of consumers”.
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