Britain to Review Supermarket Merger

In March, British officials launched an inquiry to examine the competitive impacts of a merger between two of the country's top supermarket chains. The findings could derail attempts by Britain's top three and number five chains—Tesco, Sainsbury, Wal-Mart-owned Asda, and Morrison—to purchase the fourth largest grocery chain, Safeway.

"There is a significant prospect that these mergers may be expected to result in a substantial lessening of competition," said Trade and Industry Secretary Patricia Hewitt, who ordered the Competition Commission to conduct the review. The top four chains already have 70 percent of the market. The Commission is expected to complete the review by August.

Meanwhile, under pressure from farm and consumer groups, the Office of Fair Trading has decided to investigate how well a new supermarket code of conduct is working. The code was implemented last March after the Competition Commission found extensive evidence that large supermarket chains were exploiting their market power to extract unfair prices and terms from farmers and food manufacturers.

John Breach of the British Independent Fruit Growers' Association has called the code "worse than useless," because supermarkets helped draft it and producers are too scared of retaliation to report abuses. Many groups, including Friends of the Earth and Grassroots Action on Food and Farming, are pushing the government to drop the code and impose stronger regulations.

• Documents concerning the merger
• Office of Fair Trading documents on the code
• For background on the code, see the March 2002 issue of this bulletin
• Friends of the Earth
• Grassroots Action on Food and Farming

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