Safeway bids referred to UK competition watchdog

Four of the five potential bids for supermarket group Safeway were today referred to the competition watchdog for further investigation.

Tesco, Asda, Sainsbury’s and Morrisons – the only group so far to table a firm offer – will now be subject to an inquiry by the Competition Commission. Only a proposal from retail entrepreneur Philip Green has avoided referral.

Trade secretary Patricia Hewitt announced the move after a review in the last month led by the Deputy Director General of Fair Trading.

Morrisons had been expected by analysts to avoid an investigation because most of its stores lie in areas not overlapping with Safeway.

In the cases of Tesco, Sainsbury’s and Asda, Ms Hewitt said she had accepted advice that there was a significant prospect that the proposed mergers could result in a “substantial lessening of competition”.

There were also reasonable grounds to believe there could be the same outcome from a tie-up involving Safeway and Bradford-based Morrisons, Ms Hewitt added.

Proposals from the quartet on how they can alleviate competition concerns through store disposals should now be a key factor in the outcome of the Competition Commission report, which is due by August 12.