Farmers and consumers must have a say in Wal-Mart takeover14 January 2003
Friends of the Earth today urged the Government to ensure that Wal-Mart does not evade an investigation by competition authorities into its bid to take over Safeway. Speculation suggests that the giant American company, which owns UK supermarket chain Asda, is hoping to reach agreement with the Office of Fair Trading that if it sells off enough stores the merger will be allowed to go ahead.
The competition authorities are required to consider whether significant mergers of this type are against the public interest. Friends of the Earth is warning that even if Wal-Mart sells off enough stores to avoid a "monopoly", the deal will still be a nail in the coffin of many farmers and reduce consumer choice. Farmers and other suppliers, consumer organisations, and independent shops are all likely to be effected by the deal and Friends of the Earth believes their views on this should be heard.
The Competition Commission already has evidence of how Asda uses its power to bully suppliers. Its investigation into supermarkets published in 2000 found that 18 Asda practices in dealing with suppliers adversely affected the public interest. These included seeking discounts on agreed prices and seeking support from suppliers in matching lower retail prices offered by a competing retailer. The Competition Commission concluded that such practices were likely to reduce product innovation by suppliers and so lead to lower quality and less consumer choice. The additional buying power that Asda/Wal-Mart would gain from the Safeway merger would further tip the balance of power from suppliers to big retailers.
Friends of the Earth Food and Farming Campaigner Sandra Bell said: "Even if it sells off some stores, Wal-Mart's takeover of Safeway could put about half of the UK's grocery market in the hands of just two very powerful corporate retailers. This cannot be good news for consumers and would fly in the face of Government commitments to support British farmers and small businesses. There must be a thorough investigation of this merger with input from suppliers, consumer groups, and representatives of independent retailers. If this goes ahead, they will all lose out."
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