Trade and industry secretary Patricia Hewitt finally received the Competition Commission’s 840-page report on Monday after a six-day delay. She now has a 30-working day administrative target to review the report.
An announcement is now expected at the end of September, after which a 60-day takeover timetable kicks in. “The takeover could be completed this year but if the report deliberates over store disposals, it could take longer,” said Rhys Williams at Seymour Pierce.
Safeway is expected to keep its business stable due to the
financial incentives for HQ staff but relationships with suppliers are expected to further deteriorate.
Meanwhile, virtually all suppliers still want to see Morrisons win, saying this would be a way of maintaining balance in the grocery retail sector - and say they want to see an end to the protracted auction process.
Many of those quizzed as part of our regular Reader Panel survey of top supplier executives say they are worried by the uncertainty. “The sooner this is all settled the better,” said one. “We have seen a sharp downturn in our trading with Safeway and in this climate it is very difficult to get agreement on actions to improve trading.”
Another supplier told us: “Delay in the decision-making process is bad for everyone. We need to move on.”
Some are also worried the Commission report will not provide clear cut answers, particularly when it comes to any enforced sale of Safeway stores. “Morrisons would clearly be best for manufacturers,” added one. “If any of the other retailers get it then even more power will be held by the top three and the fight for market share will put more strain on manufacturers and send some to the wall.”
Despite Asda’s last-minute talks with the Commission last week, the fact it is now seen as unlikely to have had the green light from the Commission may help explain why suppliers appear less concerned about the implications of the auction. In March, almost half thought the prospect of Safeway being acquired posed a commercial threat. Today, just 16% are that gloomy.
Sean McAllister & Julian Hunt