Wholesalers have abandoned their legal challenge to the OFT’s decision to allow Tesco’s takeover of the Adminstore c-store chain because of fears they could be forced to pay huge legal bills.
Last month the Federation of Wholesale Distributors announced it had hired top London solicitors Macfarlanes to fight the decision. At the heart of the case was the OFT’s belief that the one-stop (supermarket) and top-up (convenience) markets should be considered as distinct.
The FWD expected only to have to pay its own costs because of the way the Competition Appeals Tribunal operates.
FWD director general Alan Toft explained: “The CAT has been set up to enable small firms to challenge the regulator. Because of its function it was not expected to award the OFT costs, otherwise small firms and trade associations would be deterred from using it.”
However, Tesco also applied to take part in the proceedings and hired another top firm of lawyers.
The FWD was then advised it might have to pay Tesco’s costs if it lost, and that despite the unique nature of the CAT the OFT could also insist its costs were paid too.
Faced with the possibility of these extra costs, Toft said it had been forced to withdraw because the potential cost was not sustainable. Following FWD’s withdrawal, however, Tesco informed the tribunal it would not ask for its legal costs.
Toft insisted the decision to withdraw had nothing to do with the merits of the case. “We were told we had a good case, but could not put our funds at undue risk,” he said.
John Wood