Ocado must be fuming after reading the threatening comments made by Waitrose MD Mark Price in the weekend papers.

In an interview with The Telegraph, Price raised the threat of legal action over the potential tie-up between Morrisons and Ocado and said he would not knowingly sign a contract with Ocado agreeing to the online grocer helping a rival.

The timing of his comments are embarrassing for Ocado, coming a day after Ocado’s management sought to publicly reassure investors at its AGM that any agreement with Morrisons would be complementary to Ocado’s existing relationship with Waitrose.

They are also premature. Waitrose knows nothing of the details of the talks between Ocado and Morrisons, so is it really appropriate for Price to take such a publicly critical stance?

And they are high-handed. Ocado is effectively Waitrose’s biggest customer and it is happy to allow Waitrose to openly compete against it. So why shouldn’t Ocado be allowed to do the same?

Legally, there appears to be little basis for Waitrose to stop an agreement going ahead between Ocado and Morrisons. The supply agreement is just that – a supply agreement. As Numis pointed out in a note to investors today that played down the threat of a breach of contract resulting from any IP licensing agreement or delivery tie-up, it restricts where and how Ocado sources products, but not who Ocado can deliver for.

In any case, it is difficult to see how Ocado helping Morrisons build an online business would have a detrimental effect on Waitrose. Morrisons opening an online shop is hardly likely to prompt Waitrose shoppers to jump ship and shop at Morrisons.

A tie-up with Morrisons could help create a healthier and profitable Ocado, from which Waitrose would benefit as a supplier. By standing in the way of a deal, Price is wanting to have his cake and eat it.

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