Morrison's bid for Safeway gets green light

The Morrison's bid for Safeways has been given the green light, but on the proviso that it sells off some of its stores, it has been announced today.

The Competition Commission's report, which was accepted today by the DTI, found that the bid would go "against the public interest in certain local areas" where the number of competing supermarkets would be reduced. However, should Morrisons divest itself of 53 stores in areas where local competition concerns would arise as a result of the acquisition, the bid for Safeway will be allowed to proceed.

The Competition Commission said 48 of these stores are one-stop shopping stores (stores greater than 1400 square metres in size), and five are smaller stores.

For Asda, Sainsbury's and Tesco the Commission concluded that each of the parties should be prohibited from acquiring the whole or any part of Safeway, other than Safeway stores that are divested to "remedy the adverse effects specified in the case of the merger in contemplation between Morrisons and Safeway".

Mrs Hewitt has asked the Office of Fair Trading (OFT) to negotiate undertakings with Morrisons in relation to the limited store divestments. She has also asked the OFT to negotiate undertakings with Asda, Sainsbury's and Tesco in relation to the prohibition of these proposed mergers.

Competition Commission Chairman Sir Derek Morris today welcomed Trade and Industry Secretary Patricia Hewitt's decision to accept, in full, the Commission's recommendations.

Sir Derek said: "If Morrison's are successful with their bid for Safeway we would expect them to become a strong national player. They should exert a positive competitive effect on the grocery retail sector, and benefit shoppers.

"The Commission had just over four-and-a-half months to investigate four merger situations. All of these needed to be assessed as to their likely impact on competition, at the national and local levels, in the one-stop grocery retail sector, and more widely."

(gmcg)