Regulators and market truth
Iceland retail chain, has welcomed the suggestion that Morrisons is
leading the bidders for Safeway, but repeated calls for a more
intelligent assessment of the UK retail sector as a whole.
Just two days after the UK Competition Commission announced that it was at the half way stage in its assessment of the various bids for the country's fourth largest supermarket group Safeway, the chief executive of one of the UK's few retail groups not bidding for the company has criticised the regulators' judgement.
According to a report in the Financial Times, Bill Grimsey, chief executive of Big Food Group - owner of the Iceland chain - accused the Competition Commission of failing to understand how the British grocery retail market works.
While Grimsey welcomed the suggestion that the Commission favoured the bid from Morrisons - the smallest of the four main rivals fighting for control of Safeway - because it would maintain the four-way split at the top of the market, he said that the Commission had also failed to act on what he said were flaws in the initial assessment of the UK supermarket sector carried out in 2001.
The original Office of Fair Trading report (somewhat controversially) suggested that there were in fact two grocery markets in the UK - one-stop (the category in which major players such as Tesco, Sainsbury, Asda and Safeway fall) and convenience (where companies such as Iceland and Co-op are among the leading players).
But with so many of the 'one-stop' supermarket groups now moving into the convenience store sector - Tesco and Sainsbury in particular - Grimsey said that the grocery market was becoming even more unified than it was before, and that the Commission should look at the broader market when making its assessment of who has the right to bid for Safeway.
Grimsey was one of the most vocal opponents of Tesco's acquisition of the T&S convenience store group, arguing that the largest supermarket retailer's entry into the convenience market would have disastrous effects on competition and consumer choice.
According to the FT report, Grimsey said that many independent retailers operated in communities where large operators were not prepared to trade, but that they were increasingly under threat from the expansion of the major retail groups into more widespread communities.
