The news that two of the big four supermarkets in this country were in merger talks was greeted with concern with many people.
If this goes ahead, the new company would control 30% of the market which is in few enough hands as it is.
Vince Cable basically said that it was a no-brainer that this should be fully investigated before it was allowed. He said:
The grocery market – and the British shopper – already suffers from the mid-market being dominated by just a handful of big players. What the merger of the second and third biggest supermarkets threatens is the creation of even more concentrated local monopolies, so it is obvious that there must be an investigation by the Competition & Markets Authority, starting immediately.
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16 Comments
If the political classes were on or below the average wage they would be less keen on allowing these mega mergers. If either company was on the verge of bankruptcy then it would be a good idea but they are both profitable companies so the consumer will find less benefit in the lack of competition, higher prices and lower quality. Conservatives should be promoting capitalism and fair competition but these big companies want to move to cartel style trading (as per the disgraceful energy companies).
Every time the Conservatives let this kind of thing happen it makes Labour’s ranting seem more attractive,,
I see no problems with allowing private business to merge if they deem it sensible. We are economic liberals, we should not be interfering in the concerns of private business. The socialists would have banned Walmart from the UK if they had their way, in much the same way they bully G4S, Capita, Serco, Ryanair and Southern.
Stimpson 29th Apr ’18 – 12:35pm…………… The socialists would have banned Walmart from the UK if they had their way, in much the same way they bully G4S, Capita, Serco, Ryanair and Southern……….
You forgot to mention Carillion in your list of organisations, from G4S to Southern, that, are held in high esteem by the public.
@ stimpson “We are economic liberals,….”
You missed the bus Stimpson, by nearly 120 years………
@Stimpson. Who are the ‘We’? This Party has not been Economic Liberal for over a century -despite the recent, now failed, attempts to start to move us back in that direction.
i declare a small interest as a small shareholder in Sainsburys while shopping mainly at Waitrose, which is owned by staff described as partners.
The structure of the proposed merger is not yet decided. I would abhor Wal-Mart becoming the largest share holder. Therefore a cash underwriting of an offer for Asda by Sainsbury’s is desirable, but if Qatari investors want to sell, is it possible?
Running the combined business might be difficult, requiring two different strategies. One remembers what happened when the UK end of Safeway came up for sale.
Paul Holmes David Raw
You play into the hands of Stimpson, if pushing the narrative that we are not economic Liberals.
Far better to see the comment by David about one hundred and twenty years, and interpret it as economic Liberalism is about a balanced economy, fair as well as free trade, and free trade that is not a free for all but is fair for all.
Stimpson makes the mistake of thinking that we stand for something akin to neo-liberalism, a phrase many of us see as overused and not what Liberalism is, it is equally daft to presume the answer is the complete reverse and swing to the view that social Liberalism is nothing to do with economic Liberalism.
The two go hand in hand, anyone who thinks that corporate monopoly or laissez faire is Liberalism is as daft as thinking warmed over socialism is social Liberalism.
It is not so often that I agree with Lorezo 100%. Call it what you will, but most of us would resist the formation of monopolistic giant businesses. Wouldn’t that be Liberalism applied to economics? (And why Stimpson is wrong on Liberal economic grounds?)
Adam Smith cautioned against monopolies and over dominance of the market. He felt it was an area that the government could extend a ” guiding hand ” to protect the public. A fact that is conveniently forgotten by ultra free marketeers.
This merger could !knit choice and result in larger prices for consumers therefore needs investigating. I fear though that government is more likely to allow this in solidarity with the needs of business over the needs of the public.
Well said Lorenzo.
Within 5 miles of my home I have Tesco’s, Sainsburys, Aldi, Lidl, Waitrose, Morrisons and an Asda. I think the prospect of a lack of competition in my corner of these isles is remote. Indeed, if this merger indicates a serious attempt to knock Tesco’s off their perch, it may preceded a price war which would be to the benefit of customers.
As Vince is fully aware, companies merging is part of the normal dynamic of capitalism. On that basis alone I would expect to hear Corbynite moaning, but to hear it from liberals is a little depressing
In the 1980’s the third largest supermarket group was Fine Fare. They were bought out by the company who eventually became Sommerfield, who were themselves bought out by the co-op, I believe. All these mergers, and the world still turns ! It’s normal folks, relax.
Or perhaps the greater worry is the increased pressure that a smaller number of supermarket groups increasingly dominate the purchasing and supply chains. Driving down prices for consumers is great but the cost is being bourne by the suppliers such as farmers. Should this not be questioned on sustainability and environmental grounds at the very least.
Martin, Chris, thanks.
We agree on much, one hundred per cent of that amongst Liberals let alone anyone in politics is not necessary or welcome, but great to find regular good rapport here with friends and colleagues..
Attention needs to paid to whether this is in the public interest. It shouldn’t just be a case of passing a percentage of market threshold, but also just whether ordinary consumers will benefit.
Our demand for food is pretty constant so there isn’t the argument that we need to merge to save a failing industry as is sometimes the case.
Cable should run on this one.
There’s a prime facie case for referring this to Monopolies and Mergers Commission,as the combined group could have about a third of the market. Tesco has a similar amount, but mostly organic growth (maybe recent Booker acquisition perhaps should have been referred).
if having one supplier with a third of the market makes one uneasy, two is another step…
I find it interesting that no one has commented on why Walmart are divesting themselves of their European venture, perhaps in part because it will soon be outside of the EU!
On reading the details, a concern has to be who other than an existing retailer will actually offer anything of benefit to consumers; previous experience indicates that a sale to a hedge fund or similar will only rsult in under-investment, the business being loaded up with debt and ultimately (5~10 years) closed…