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Tesco cleared for london stores takeover
5 March 2004
Friends of the Earth has criticised today's decision by the Office of Fair Trading not to refer Tesco's takeover of the London Adminstore chain to the Competition Commission [1]. The environmental organisation is calling for a moratorium on any further mergers by the UK's largest retailer warning that consumers will be left with little choice of where to shop if its aggressive takeover plan is not stopped.A series of reports from competition authorities [2] have already confirmed that market dominance of Tesco and the other major supermarkets is having an adverse effect on consumer choice and competitiveness by pushing small retailers and farmers out of business. Supermarkets with over 8% of the market were found to be abusing their powerful position. Tesco is the UK's most dominant retailer with over 25% of the market. The Adminstore deal will give Tesco 45 new stores in London where it already controls a third of the grocery market (33.3%).
This is not the first time Tesco has been allowed to takeover a chain of stores without investigating the impacts. In December 2002, Tesco was cleared to take over T&S stores. The OFT said today that the takeover would not significantly effect Tesco's existing size and potential for growth. But Friends of the Earth says the decision does not consider the impacts of the piecemeal growth of Tesco which continues to set its sights on chains of small stores.
As well as a moratorium on any further Tesco takeover, Friends of the Earth also wants an investigation into the impacts of store acquisitions by large supermarkets.
Sandra Bell, Food and Farming Campaigner for Friends of the Earth said
"Today's OFT decision makes little sense as it fails to protect consumers, farmers and small businesses from the growing power of the UK's biggest supermarket. Every time Tesco is allowed to take over another chain of stores it strengthens its grip on the UK food market. This leaves shoppers with less choice of where to shop, and weakens the bargaining position of suppliers.The Government must step in and impose a moratorium on further Tesco takeovers"
[1] www.oft.gov.uk/News/Press+releases/2004/39-04.htm
[2] Competition Commission, 2000, Supermarkets; Competition Commission, 2003, Safeway mergers report, and OFT, 2004, review of the supermarkets code of practice
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Published by Friends of the Earth Trust
Last modified: Jun 2008
