Merger Update
November 11 2003 - 7:00AM
UK Regulatory
RNS Number:9202R
Dept Trade & Industry
11 November 2003
Statement to the Stock Exchange
Safeway undertakings - clarification of scope
On 26 September, Patricia Hewitt announced that she had asked the OFT to obtain
undertakings from Asda, Sainsbury's and Tesco not to acquire Safeway or any part
of Safeway, following the Competition Commission's (CC) adverse report into the
proposed acquisitions of Safeway.
Following the first round of consultation between OFT and these parties, Ms
Hewitt today announced that having accepted in full the CC's conclusions and
recommendations, it has become clear that there is some speculation over the
exact scope of the prohibition undertakings required. She has concluded that
she should make a further comment on what, in the light of the CC's report, she
considers this to be in order to minimise market uncertainty."
Ms Hewitt said that she intends to indicate to the OFT that she would be minded
to accept undertakings to the effect that:
(i) the prohibition upon acquiring "any part of" Safeway should exclude
transactions to which the OFT has given its prior written consent;
(ii) "any part of" Safeway should be construed as being any Safeway Assets or
collection of Safeway Assets the acquisition of which in the view of the OFT may
give rise to the adverse effects specified in the CC's report; and
(iii) "Safeway Assets" should be defined as including any store or other
property, including distribution depots and sites, used by Safeway as part of
its grocery retailing business.
BACKGROUND INFORMATION
1. The proposed acquisition of Safeway by each of Asda Group Limited, Wm
Morrison Supermarkets PLC, J Sainsbury plc, and Tesco plc was referred to the
Competition Commission on 19 March 2003 under the Fair Trading Act 1973 (DTI
Press Notice P/2003/173). The CC submitted its report on 18 August 2003. The
Secretary of State announced her decision to accept the CC's conclusions and
recommendations on 26 September 2003 (DTI Press Notice P/2003/488).
2. The Fair Trading Act empowered the Secretary of State to refer to the CC for
investigation and report actual or proposed mergers which created or increased a
market share of over 25 per cent of the supply in the UK (or a substantial part
of the UK) of particular goods and services or which involved the takeover of
assets exceeding #70 million. Subject to transitional provisions (which apply in
this case), the merger provisions have been superseded by the Enterprise Act
2002.
3. Copies of the report "Safeway plc and Asda Group Limited (owned by Wal-Mart
Stores Inc); Wm Morrison Supermarkets PLC; J Sainsbury plc; and Tesco plc - A
report on the mergers in contemplation" (Cm 5950) are available from The
Stationery Office, price #46.70. The report will also be available on the CC
website:
http://www.competition-commission.org.uk/inquiries/completed/2003/index.htm
Department of Trade and Industry
7th Floor
1 Victoria Street
London SW1H 0ET
Public Enquiries +44 (0)20 7215 5000
Textphone +44 (0)20 7215 6740
(for those with hearing impairment)
www.dti.gov.uk
This information is provided by RNS
The company news service from the London Stock Exchange
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