For the past eight months, the news media in Britain has been speculating about what company in the United Kingdom would gain control over Safeway (no connection to the U.S. grocer of the same name), the fourth largest grocer in the U.K. This week, the Secretary of Trade and Industry ruled against a Wal-Mart acquisition of Safeway, raising concerns over too much market consolidation in one company. The Trade and Industry officials had consulted with the British Competition Commission, which by law must review all proposed mergers that would place 25% or more of a good or service under the control of one company. There were at least four suitors for the hand of Safeway: William Morrisons, J. Sainsbury, Asda (Wal-Mart’s company), and Tesco. Tesco holds the largest share of the British market, around 24% of sales. Asda (Wal-Mart) has 16%, Sainsbury close behind at 15%, and Safeway with 10%. British regulators decided against giving Safeway to any of the top three grocers. “An acquisition of Safeway by Asda, Sainsbury’s or Tesco may be expected to operate against the public interest at both a local and national level,” said Trade and Industry. This statement removes the impediments to Morrisons, which has a 5% share of the market, to acquire Safeway. Morrisons, which has 479 stores, will have to sell off 53 Safeway stores in communities where Morrisons already has a strong market share. “We’re very disappointed,” Wal-Mart/Asda was quoted as saying. Media sources indicated that a Wal-Mart appeal to the courts was unlikely. Analysts suggested that Wal-Mart might try to grow its business in Britain instead by expanding its nonfood operations by acquiring a clothing chain. A Wal-Mart spokesperson said the company still expects to add 500,000 s.f. of new stores each year, on top of the 11 million s.f. the company now controls.
For more stories about Wal-Mart in the United Kingdom, search this database by “Asda” or “Britain”.
