Sarah Butler
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Tesco is at loggerheads with regulators for the third time in a fortnight this time over the acquisition of five Somerfield stores.The Office of Fair Trading has invited rival supermarkets to comment on Tesco’s planned acquisition of stores in Thurso, Bed-lington, Little Lever and Ramsbottom all in the North of England and North Hykeham in Lincolnshire, raising the prospect of an investigation into each store purchase.
Tesco now controls about 30 per cent of the UK’s grocery market and is already the main target of a Competition Commission investigation into the power of the supermarkets. The provisional findings are expected to be revealed next month.
Last week, the Competition Commission said that it had provisionally found that Tesco’s acquisition of a former Coop site in Slough had reduced competition in the area.
Tesco was ordered to stop developing the site last month while the commission carried out an investigation, the first into the acquisition of just one store.
In a report listing its provisional findings, the commission said that the purchase of the site in 2003, close to an existing 100,000 sq ft Tesco store, had “resulted in a substantial lessening of competition in the market for grocery retailing in Slough”.
Last week, Tesco was also named as one of a number of parties being investigated by the Office of Fair Trading over alleged price-fixing of dairy products.
A spokesman for Tesco said that the OFT’s interest in its acquisition of the five Somerfield stores was a “routine notification” and was not linked to the other investigations.
A decision on whether any further investigation is needed is expected to be made by October 8.
Regulators have become increasingly involved in the minutiae of supermarket transactions since the Competition Commission inquiry into the takeover of Safeway.
Tesco, Asda and J Sainsbury were all blocked from making a bid for the supermarket, which is now owned by Wm Morrison.
Morrison was forced to sell more than 50 large Safeway stores as part of its merger agreement with the commission, but the three largest chains were also blocked from buying many of those outlets, as the regulator pursued its policy of keeping at least four rival stores in each local area.
Tesco has argued that it is more important to consider competition on a national level, but the commission showed its commitment to local considerations in its decision over Slough, when it reiterated the need to maintain healthy competition within a 15-minute drive time.
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