Elaine Watson
A new report into Sainsbury’s acquisition of Jacksons from the OFT betrays the regulator’s “astonishing lack of understanding” of the food retail market, independent retailers have claimed.
The eight-page report, which explains why the deal was not referred to the Competition Commission, was greeted with anger and dismay by independents, who were thought to be making headway in their campaign to urge regulators to look again at the market.
While it acknowledged that independents were more worried about the cumulative impact of the flood of recent deals rather than this particular acquisition, the OFT said it had to work on a case-by-case basis.
Spar UK MD Jerry Marwood said this would prove disastrous for the independent retail sector. He said: “The negative thing is that the OFT wants to see a corpse before believing there is even a threat of murder.”
Depressingly for suppliers, who have long argued that dividing the grocery sector into different markets for competition reasons is wrong, the OFT insisted there was a clear distinction between one-stop and convenience shopping.
However, it would not have referred the Jacksons deal even if it did see the sector as just one market, claimed the OFT: “The substantive analysis would not differ in this case even if the focus of our analysis were to be the supply of all groceries.”
It went on to claim that the extra buying clout gained by Sainsbury through the deal was negligible. However, the issue worrying suppliers was not Sainsbury’s extra clout but the fact its terms would be applied to Jacksons, said one retailer. “Read the letters Sainsbury sent to Jacksons’ suppliers as soon as the deal was done.”
Harris International Marketing MD Tom Fender said: “This is depressing for suppliers. Margins will be squeezed.”
The OFT’s insistence that continued consolidation would not drive up the price of c-stores beyond the reach of smaller chains was also difficult to understand, said Association of Convenience Stores public affairs and commercial manager James Lowman. “People are paying up to £1m for a c-store. Independent retailers don’t have that kind of money to spend.”
The ACS has written to the OFT accusing it of “creating confusing and inappropriate definitions, the only purpose of which has been to distract your officers and the competition authorities from addressing the real effects of consolidation”.
However, Federation of Wholesale Distributors director general Alan Toft said the OFT was just following its remit and blamed its approach on the Consumers’ Association, which supported the acquisition.
He added: “It is farcical that an organisation set up to represent consumers is supporting the concept of superstore domination of the market.”
>>p24 Opinion, Letters
A new report into Sainsbury’s acquisition of Jacksons from the OFT betrays the regulator’s “astonishing lack of understanding” of the food retail market, independent retailers have claimed.
The eight-page report, which explains why the deal was not referred to the Competition Commission, was greeted with anger and dismay by independents, who were thought to be making headway in their campaign to urge regulators to look again at the market.
While it acknowledged that independents were more worried about the cumulative impact of the flood of recent deals rather than this particular acquisition, the OFT said it had to work on a case-by-case basis.
Spar UK MD Jerry Marwood said this would prove disastrous for the independent retail sector. He said: “The negative thing is that the OFT wants to see a corpse before believing there is even a threat of murder.”
Depressingly for suppliers, who have long argued that dividing the grocery sector into different markets for competition reasons is wrong, the OFT insisted there was a clear distinction between one-stop and convenience shopping.
However, it would not have referred the Jacksons deal even if it did see the sector as just one market, claimed the OFT: “The substantive analysis would not differ in this case even if the focus of our analysis were to be the supply of all groceries.”
It went on to claim that the extra buying clout gained by Sainsbury through the deal was negligible. However, the issue worrying suppliers was not Sainsbury’s extra clout but the fact its terms would be applied to Jacksons, said one retailer. “Read the letters Sainsbury sent to Jacksons’ suppliers as soon as the deal was done.”
Harris International Marketing MD Tom Fender said: “This is depressing for suppliers. Margins will be squeezed.”
The OFT’s insistence that continued consolidation would not drive up the price of c-stores beyond the reach of smaller chains was also difficult to understand, said Association of Convenience Stores public affairs and commercial manager James Lowman. “People are paying up to £1m for a c-store. Independent retailers don’t have that kind of money to spend.”
The ACS has written to the OFT accusing it of “creating confusing and inappropriate definitions, the only purpose of which has been to distract your officers and the competition authorities from addressing the real effects of consolidation”.
However, Federation of Wholesale Distributors director general Alan Toft said the OFT was just following its remit and blamed its approach on the Consumers’ Association, which supported the acquisition.
He added: “It is farcical that an organisation set up to represent consumers is supporting the concept of superstore domination of the market.”
>>p24 Opinion, Letters
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