Watchdogs to reject calls for reform

2 July 2003
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03 July 2003 | Robin Parker

Competition watchdogs weighing takeover bids for Safeway are poised to reject calls to overhaul rules governing how supermarkets treat their suppliers.

In a statement issued ahead of next month's judgment of the bids, the Competition Commission spells out issues raised by supermarkets and other bodies in response to a letter sent in May.

One possible outcome is that approval of any bid for Safeway's 480 stores would be conditional on a strengthening of the Office of Fair Trading's code of practice, introduced last year to stop buyers at supermarkets from abusing suppliers. But the successful bidder would have to "agree to adhere to behavioural undertakings", making the code unworkable, the commission says.

Another remedy to improve suppliers' standing is to have a "level playing field" by ensuring price differences between supermarkets reflect cost differences.

Concerns have also been raised that Tesco, Sainbsury's, Asda and Morrison's - the UK's four biggest supermarket chains - all want to step up their own brands if their bids are successful.

Branded good suppliers fear that own-brands could greatly dent their business.

Supermarkets have until tomorrow to respond to the Commission's Remedies Letter, which also considers competition and distribution issues.

SMjul2003

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