Netto’s UK MD Claus Waedeled has slammed the Competition Commission’s view that the discounters should only be allowed to buy stores from their multiple rivals in special cases.
Waedeled said that the commission’s existing stance on the discounters was “bad for competition in the UK”.
He added: “How will a new company from another country be able to establish itself?”
The Competition Commission is due to report next week on 14 former Safeway stores that Somerfield bought from Morrisons last October.
But even if Somerfield is forced to sell the stores, the discounters fear that they will once again not be considered to
represent “effective competition” as set out in the commission’s report in December 2003 prior to Morrisons’ takeover of Safeway in March 2004.
A Competition Commission spokesman this week confirmed that the review process of the Somerfield deal did consider whether the discounters would now represent effective competition but refused to say whether its views had changed since 2003. However, latest statistics show that more and more UK consumers are now visiting the discounters. Figures released this week by TNS revealed that Netto, Lidl and Aldi accounted for more than 5% of total grocery till spend, while The Grocer’s latest TradeTrak figures from ACNielsen show that more than 20% of all households now visit the discounters every four weeks.
Carl Bradbrook, senior consultant with location planning consultants CACI, said that it might well be time for the commission to think again. “The general rules that were in force a year ago may now be so relevant now. Precedent has been set with stores already going to the likes of Netto.”
Netto has just been given permission to buy the former Safeway store at Bury Road, Bolton. However, this was only after none of the “effective” competitors showed interest.
The current reasoning behind preventing the discounters being considered as effective competition is that they do not offer a wide enough range.
This was dismissed by Netto’s development controller William Smith. He argued that while Tesco would offer 20 types of toilet roll and Netto only stocked two, there was still enough choice to allow a one-stop shop.
This claim was backed up by the OFT. A spokeswoman said Netto was allowed to buy the Bury Road store in Bolton because “as a fallback, Netto did provide a one-stop offer”.
Ronan Hegarty
Waedeled said that the commission’s existing stance on the discounters was “bad for competition in the UK”.
He added: “How will a new company from another country be able to establish itself?”
The Competition Commission is due to report next week on 14 former Safeway stores that Somerfield bought from Morrisons last October.
But even if Somerfield is forced to sell the stores, the discounters fear that they will once again not be considered to
represent “effective competition” as set out in the commission’s report in December 2003 prior to Morrisons’ takeover of Safeway in March 2004.
A Competition Commission spokesman this week confirmed that the review process of the Somerfield deal did consider whether the discounters would now represent effective competition but refused to say whether its views had changed since 2003. However, latest statistics show that more and more UK consumers are now visiting the discounters. Figures released this week by TNS revealed that Netto, Lidl and Aldi accounted for more than 5% of total grocery till spend, while The Grocer’s latest TradeTrak figures from ACNielsen show that more than 20% of all households now visit the discounters every four weeks.
Carl Bradbrook, senior consultant with location planning consultants CACI, said that it might well be time for the commission to think again. “The general rules that were in force a year ago may now be so relevant now. Precedent has been set with stores already going to the likes of Netto.”
Netto has just been given permission to buy the former Safeway store at Bury Road, Bolton. However, this was only after none of the “effective” competitors showed interest.
The current reasoning behind preventing the discounters being considered as effective competition is that they do not offer a wide enough range.
This was dismissed by Netto’s development controller William Smith. He argued that while Tesco would offer 20 types of toilet roll and Netto only stocked two, there was still enough choice to allow a one-stop shop.
This claim was backed up by the OFT. A spokeswoman said Netto was allowed to buy the Bury Road store in Bolton because “as a fallback, Netto did provide a one-stop offer”.
Ronan Hegarty
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