Oh dear. Another bad week for the food retail sector. First, Asda and Tesco announce the next, headline grabbing phase of their price war. Then up pops the Competition Commission with a letter to the chains suggesting they may be forced to sell stores to end local monopolies. Both events cast a further shadow over a sector already in the doldrums. Shares in Tesco and Sainsbury ­ the two companies with potentially the most to lose in any enforced stores auction ­ fell by more than 5% on the day the Commission document was released. That meant in just two days of trading, Sainsbury's share price slipped 181/2p to a nine year low of 2721/4p, while Tesco's stock was down 15p to 1691/2p. Some analysts believe the falls were triggered more by concerns over the impact of a prolonged price war than by the hypothetical contents of the Commission letter. One analyst welcomed the fact the Commission was clearly trying to bring a politically motivated and embarrassing probe to an end as quickly as possible. But Simon Dunn of Dresdner Kleinwort Benson said the remedies letter had only added to the uncertainty surrounding the sector. And he thought it highly unlikely investor sentiment would change until, as he put it, food retailers stopped destroying value. That's unlikely given the current climate, which means investors will continue shunning the sector. What was it Millwall fans used to sing? "Nobody loves us, and we don't care." {{NEWS }}

Topics