The OFT has given the green light to a buying alliance between wholesalers Palmer & Harvey and Makro this week but wholesalers warn it could lead to closer scrutiny of other buying groups in the future.

The approval of PalMak marks the first time the OFT has used new powers to assess whether a proposed collaboration between two businesses could be deemed anti-competitive.

PalMak was unlikely to restrict competition in the market, it said, but certain exchanges of information between the companies could lead to a reduction in competition.

P&H and Makro have therefore agreed not to exchange specific or sensitive information. Other buying alliances might not be so lucky, claimed wholesalers.

"In the UK, shoddy practices have evolved and loose alliances have grown," said one wholesaler. These would not stand up to close scrutiny, he warned.

Peter Austen, P&H MD of commercial, and Makro commercial director Allard Sjollema told The Grocer PalMak's sole aim was to help independents trade more competitively.

The companies, which have a combined turnover of £5bn, had no plans to merge, they insisted, and would not be collaborating on aspects of distribution or new business ventures.

"For the past couple of years P&H has been providing independent retailers with a better deal through various initiatives such as Partnership Plus and our new online ordering system," said Austen.

"Makro has been doing the same for its foodservice customers through initiatives such as Love the Pub. Working together we'll be able to help give our independent customers the scale benefits the multiples enjoy."

Discussions between P&H and Makro had started a year ago, Austen revealed, and about 20 category specialists from both buying teams would be working on PalMak. Suppliers were informed this week of the new alliance by letter.

However, rival wholesalers were less than impressed, with one calling it "a marriage of inconvenience".

"They have totally different customer bases," he said. "One is hugely retail and one is hugely catering. The products in common will be really insignificant. They won't be selling a single bottle more of Coke, so why should it give them better prices?"

Both needed to improve their financial performance, added Bryan Drew, group commercial director for Booker. "According to The Grocer's Big 30, P&H's profits were down 98% last year and Makro's were down 37.8%. Together they lost £26.3m. No doubt suppliers will be asked to restore the profitability of both businesses."

Read more
Makro sales in UK drop below €1bn (20 March 2010)
Makro hits higher gear in its cost-cutting drive (20 February 2010)
Palmer & Harvey poised for fourth round of redundancies (13 March 2010)
P&H offers customers online ordering service (5 December 2009)

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