13th May 2005 07:00
Competition Commission13 May 2005 News Release 34-05 13 May 2005 SOMERFIELD/MORRISON STORES Statement of issues The Competition Commission (CC) has today published an issues statement as partof its inquiry into the recent acquisition by Somerfield plc (Somerfield) of 115stores and other assets from Wm Morrison Supermarkets plc (Morrisons). In making the reference to the CC, the Office of Fair Trading (OFT) said that ithad identified 22 mid-range stores (between 280 and 1,400 sq metres) and oneone-stop store (over 1,400 sq metres) which raised possible competitionconcerns. It also noted one potential problem convenience store (below 280 sqmetres), where it was possible barriers to entry might be sufficiently low toaddress the competition issue. The issues statement follows the initial process of gathering information, viewsand evidence and identifies clearly for all interested parties the specificquestions and areas the inquiry is examining. This will form the basis for thehearings with Somerfield and other interested parties. The full issues statementis available on the CC web site at: www.competition-commission.org.uk/inquiries/ref2005/somerfield/index.htm and raises issues concerning: (a) the relevant markets, in particular: • whether it is appropriate to distinguish between one-stop shops, mid-range stores and convenience stores in assessing the effect of the acquisition; and • the relevant geographical markets, in particular the size of the local areas, for example with reference to the appropriate drive times to and from each store, that may be affected by the acquisition and the competition from other retail outlets within them, or by reference to other or additional criteria; (b) the effect of the acquisition on competition, including: • any effects of the acquisition at a national level; • the number of retail outlets which can be regarded as competing with Somerfield within local areas; and • how to assess the effect on competition in local areas: for example, on the basis of the effect of the acquisition on the number of competing fascia; or other indicators of the extent of competition such as their market shares; (c) whether the historic methodology used in previous inquiries into this sector remains appropriate for this case; (d) barriers to entry, such as planning restrictions, in the areas affected by Somerfield's acquisition of the one-stop shop, the mid-range stores and the convenience store identified by the OFT as of concern, or any other such stores we may find of concern; and (e) whether the acquisition may therefore be expected to result in a substantial lessening of competition in any of the markets affected by the acquisition. If the inquiry group (the Group) considers that the acquisition may be expectedto result in a substantial lessening of competition, it will consider whetherand, if so, what remedies might be appropriate taking into account any customerbenefits that might arise from the acquisition, and issue any remediesstatement, should this be required, at about the time it publishes itsprovisional findings. The issues statement should not be seen as implying that the Group hasidentified any competition concerns-the CC has yet to reach any conclusions onthis inquiry. The purpose of making the statement of issues public is to informall interested parties and give them an opportunity to raise any further pointswith the CC. Anyone wishing to comment further on any of the issues raised is requested to doso by 27 May 2005 in writing to: Anne Jolly Inquiry Secretary (Somerfield/Morrison inquiry) Victoria House Southampton Row London WC1B 4AD or by email to: [email protected] The CC will now continue to gather evidence in this inquiry and will publish itsprovisional findings according to the administrative timetable available on theCC's web site at: www.competition-commission.org.uk/inquiries/current/somerfield/index.htm. Notes for editors 1. In 2003, the CC reported on the proposed mergers of Asda Group Limited, Morrisons, J Sainsbury plc and Tesco plc with Safeway plc (the Safeway report). The group will need to consider to what extent the methodology for evaluating competition in grocery retailing set out in that report can be applied, or may require refining, in the circumstances of the current case. 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 CC has a 24-week period in which it is required to publish its report, which may be extended by no more than eight weeks if it considers that there are special reasons why the report cannot be published within that period. 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. 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 Stephen Wilks. 6. 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. 7. Enquiries should be directed to Francis Royle, Press Officer, 020 7271 0242 (email: [email protected]) or Rory Taylor on 020 7271 0488 ([email protected]). Victoria House Southampton Row London WC1B 4AD Press enquiries 020 7271 0242 Facsimile 020 7271 0177 [email protected] www.competition-commission.org.uk This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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