One of the top independent supermarket chains has won a significant concession from the Competition Commission as to what sorts of business offer “effective competition” to the major multiples.
The Proudfoot Group, which runs six stores in north Yorkshire, had inquired about three of the 14 former Safeway stores - in Yarm, Pocklington and Filey - that the Competition Commission ordered Somerfield to sell.
Joint MD Ian Proudfoot was outraged when he discovered Somerfield thought it had to offer the stores first to the multiples due to the “effective competition” rule introduced in 2003 by the Commission as part of its report into Safeway’s takeover by Morrisons.
He complained to the Commission and has received a reply from deputy chairman Christopher Clarke, who clearly backs the notion that
companies such as Proudfoot offer a viable alternative.
“We specifically envisaged that independent chains, such as your own, would be eligible to purchase the stores if they could show they were able to provide a competitive offer to customers on a sustainable basis,” writes Clarke.
“Be assured we wish to support development of competition in this market as in all other markets.”
But Proudfoot said he found the whole situation “crazy”, saying: “Why should such a regime be in place? This interfering is just helping the giants and is not the way the Competition Commission should be promoting retail diversity.”
He added: “We have already written to Somerfield again to open the way for us to be considered as a bidder.”
Proudfoot’s good news will further infuriate the hard discounters, who have been told they definitely do not offer “effective competition” on the grounds of range, quality and service - and are effectively able to buy only those former Safeway stores that the major multiples don’t want. Netto UK boss Claus Waedeled recently slammed that regime (The Grocer, August 27, p8).
Proudfoot sympathised with the hard discounters: “The discount companies would provide true alternatives to the existing retail experience.”
The Grocer says
So what planet are the boffins at the Competition Commission and the OFT actually living on? As the stories on these pages show, not many readers of The Grocer think it’s Planet Earth. Only those living on Planet Zog could continue to defend the two-market definition of grocery retail or the ‘effective competition’ ruling. It’s this kind of flawed thinking that’s creating absolute havoc in the market. It allows some of the biggest retailers, with the deepest pockets, to grow their overall market share by stealth thanks to what is being dubbed “creeping acquisition”. And what do the so-called competition regulators do? Sit by idly as real competition and choice is stifled. On Planet Zog, three fascias is apparently more than enough choice. On the planet where we live, most people want to see a lot more diversity than that.