Safeway probe tests supplier impact

21 May 2003

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22 May 2003 | Robin Parker 

Competition watchdogs are looking into whether the buy-out of the supermarket chain Safeway will give suppliers less bargaining power.

In a 33-point letter sent to the supermarkets vying to buy Safeway's 480 stores, the Competition Commission says it wants to find out if a merger may affect the size, efficiency or diversity of any part of the UK's grocery supply chain.

The commission says that an increase in the winning bidder's buying power could force suppliers to charge smaller customers more to recoup their loss of margin.

The impact of a buyout on a code of conduct for supermarkets and suppliers, introduced last year to curb abuses of buying power, will also be assessed.

The inquiry will assess bids from Tesco, Sainsbury's, Asda and Morrisons - four of the biggest UK supermarket chains. A fifth bid from retail entrepreneur Philip Green will not be scrutinised because he does not own any supermarkets.

The commission is expected to reach a decision in August.

SMmay2003

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