Why the Safeway take-over must be stopped

30 April 2003

Friends of the Earth presented its case for preventing the take-over of Safeway at an open meeting held by the Competition Commission on 30 April. The environmental campaign group explained why each of the proposed bids by rival supermarkets would be bad for consumers, farmers and small businesses. The meeting was divided into two sections. One looked at national impacts, including effects on suppliers, and the other at local impacts including effects on consumers. Friends of the Earth's presentation included the following points:

National/supplier impacts

• Allowing any of the supermarket bidders to take over Safeway would put three quarters of grocery shopping in the hands of just four companies. This is an unacceptable degree of concentration.
  
• The Supermarket Code of Practice is the only action taken by Government to redress the imbalance of power between major supermarkets and their suppliers including farmers. Evidence, including from a Friends of the Earth survey, suggests that the Code has failed and that supermarkets are continuing to abuse their power. Further concentration of power will exacerbate existing problems.
  
• Farmers in the UK are already going out of business as a result of the unreasonable demands of the major supermarkets, giving them more power will make things worse. We could be left with fewer large intensive farmers in the UK and more global sourcing, going against consumer's stated desire for more local and UK produced food.

Local/consumer impacts

• The Competition Commission must consider the impact on smaller and independent local shops, which find it hard to compete with the major supermarkets. Real consumer choice can only be provided by a diversity of shops, not by a range of big supermarkets.
  
• The Office of Fair Trading has warned that prices may go up if competition is reduced. The Competition Commission's report on supermarkets in 2000 found that the major supermarkets put prices up in locations where they did not have a major rival.
  
• The loss of local shops can have a higher impact on lower income families who may not have access to a car. The Competition Commission must consider the impacts of more local shops closing down if market share gets even more concentrated. And if the Competition Commission is considering allowing Safeway to be taken over if the bidding supermarket sells off some stores it must assess the impacts of shoppers having to travel further for grocery shopping.

Friends of the Earth also reminded the Competition Commission of the conclusions of its 2000 report on supermarkets. This found that the power of the biggest supermarkets allowed them to engage in practices which were anti-competitive and against the public interest. Since that report no effective action has been taken to address these issues so it is hard to see how the Government could now allow further concentration of power. Friends of the Earth has sent in a detailed submission to the Competition Commission setting out its views.

"Allowing Safeway to be taken over by a rival supermarket chain would be very bad for consumers, farmers and small shop owners," said Friends of the Earth's Real Food Campaigner, Pete Riley. "It will mean that powerful and rich corporations will cream off yet more trade and profits from smaller companies. The Competition Commission has already highlighted supermarket practices that work against the public interest. It must stop this take-over to prevent supermarkets having even more power over all our lives."

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