26th Jul 2005 07:00
Competition Commission26 July 2005 News Release 45-05 26 July 2005 SOMERFIELD ACQUISITION DAMAGES COMPETITION IN 14 AREAS The Competition Commission (CC) has provisionally concluded that the completedacquisition by Somerfield plc (Somerfield) of 115 stores and other assets fromWm Morrison Supermarkets plc (Morrisons) may be expected to result in asubstantial lessening of compe-tition in 14 local grocery retail markets inGreat Britain. Somerfield and other interested parties have until 16 August 2005to respond to these provisional findings prior to the CC taking its finaldecision. Christopher Clarke, Chairman of the inquiry, said: We identified stores in 14 areas where we have provisionally found that the acquisition is expected significantly to reduce competition resulting in higher prices, or reductions in quality, range or service. We believe the only effective means of restoring competition in these areas is for the identified stores to be sold to a suitable grocery retailer who will offer choice and actively compete in the relevant local markets. Background The vast majority of the 115 stores acquired by Somerfield are 'mid-range'stores. All had been acquired by Morrisons as part of the acquisition ofSafeway. Two of the 115 stores were among the 52 stores required by the CC to besold as a condition of approving the sale of Safeway to Morrison. Neither ofthese stores is among the 14 which now cause competition concerns. The previous 2003 CC inquiry into the sale of Safeway had focused on larger 'one-stop' stores so the inquiry group considered to what extent the methodologyfor evaluating competition in grocery retailing set out in that and a previousreport in 2000 could be applied to the circumstances of the current inquiry. TheGroup found that the 'mid-range' stores were used mainly for supplementary, thatis 'top-up' or convenience, shopping as distinct from 'one-stop' shopping andtherefore adopted a methodology relevant to such mid-range stores and to theindividual circumstances of their local markets. The stores (all mid-range stores except for the two identified) are as follows: • Bedlington• Filey (a convenience store)• Johnstone (a one-stop shop)• Kelso• Littlehampton• Middlesbrough Linthorpe• Newark• Paisley• Peebles• Pocklington• Poole Bearwood• South Shields• Whitburn (Scotland)• Yarm The summary of its provisional findings report and the notice of possibleremedies are available on the CC's web site at: www.competition-commission.org.uk/inquiries/ref2005/somerfield/index.htm The full provisional findings report will be published shortly. The CC nowinvites responses before preparing its final report. Anyone wishing to comment on the proposed remedies or on the provisionalfindings is invited to provide the CC with their response in writing. Commentson the remedies must be received by the CC no later than 8 August 2005 and onthe provisional findings by 16 August 2005. Comments should be made in writingto: Anne Jolly Inquiry Secretary (Somerfield/Morrisons inquiry) Victoria House Southampton Row London WC1B 4AD or by email to: [email protected] Notes for editors 1. The acquisition by Somerfield of 115 stores from Morrisons involved mainly mid-range stores defined as being between 280 and 1,400 sq metres (3,000 to 15,000 sq feet). Convenience stores are defined as being of a size below 280 sq metres (3,000 sq feet). One-stop shops, where most householders carry out their main weekly shop, are defined as stores of over 1,400 sq metres (15,000 sq feet). 2. The Enterprise Act 2002 empowers the OFT to refer to the CC completed or proposed mergers for investigation and report which create or enhance a 25 per cent share of supply in the UK (or a substantial part thereof) or where the UK turnover associated with the enterprise being acquired is over £70 million. 3. The Somerfield/Morrisons inquiry group consists of five members of the CC: Christopher Clarke, Group Chairman and a Deputy Chairman of the CC, Nicholas Garthwaite, Chris Goodall, Bob Turgoose and Professor Stephen Wilks. 4. The full text of this referral decision, including the list of stores which the OFT believed raised possible competition concerns, is on the OFT's web site at www.oft.gov.uk. (A link to that document is on the CC web site.) 5. Further information on the CC and its procedures, including its policy on the provision of information and the disclosure of evidence, can be obtained from its web site at: www.competition-commission.org.uk. 6. Victoria House Southampton Row London WC1B 4AD Press enquiries 020 7271 0242 Facsimile 020 7271 0177 [email protected] www.competition-commission.org.uk Enquiries should be directed to Francis Royle, Chief Press Officer, 020 72710242 (email: [email protected]) or Rory Taylor on020 7271 0488 ([email protected]). This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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