Elaine Watson
The Association of Convenience Stores has penned an angry letter to the OFT asking it to explain the thinking behind its decision to wave through Tesco's acquisition of T&S.
Although regulators gave Tesco the green light before Christmas, the OFT this week published the advice it had given to the Department of Trade and Industry on the deal as a reflection of the level of interest it had generated.
However, the ACS said the document betrayed a "staggering" lack of understanding of the practical implications of the merger.
Chief executive David Rae said: "We are not arguing over the OFT's decision not to refer the acquisition, but we are seeking clarification as to how this decision was reached. We pointed out that some products arrive at T&S outlets through direct delivery suppliers, and that the loss of T&S business would make such deliveries less efficient, with costs being passed to other retail customers.
"The OFT has missed the point, and stated that T&S operates through three distribution centres. Clearly not all product is distributed through these centres, and it is staggering that the OFT should fail to recognise that the presence of distribution centres does not rule out retailers using a variety of distribution routes."
In a paragraph that baffled many opponents of the deal, the OFT said there was "very little overlap between the parties' main suppliers". It also claimed the deal did not give Tesco an unhealthy share of the market, however it was carved up.
Even accepting that 15-25% of sales at Tesco's large stores were top-up purchases, the merged Tesco/T&S operation would still only have a 12% share of the convenience market, claimed the regulator.

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