Affected market: Grocery retail
No. ME/4174/09
Please note that the full text of the decision can be downloaded by using the link on the right. What follows are extracts regarding the parties, the transaction, jurisdiction, third party views, assessment and decision.
The OFT's decision on reference under section 33(1) given on 3 August 2009. Full text of the decision published 6 August 2009.
PARTIES
Tesco plc (Tesco) is predominately a grocery retailer (the UK's largest) with a portfolio of stores across the UK.
Co-operative Group Limited (CGL), a grocery retailer, acquired the grocery retailer Somerfield Limited (Somerfield) on 27 February 2009. Tesco proposes to acquire three former Somerfield stores from CGL in Battersea (London), Leyland and Millom (the Acquisition Stores).
TRANSACTION
Tesco notified the transaction to the OFT by a Merger Notice. The period for considering the Merger Notice commenced on 8 July 2009, and the (unextended) statutory deadline expires on 4 August 2009.
JURISDICTION
As a result of this transaction Tesco and the Acquisition Stores will cease to be distinct. The parties overlap in the supply of grocery retailing and together Tesco and the Acquisition Stores will account for over 25 per cent of all grocery retailing in the UK. As a consequence the share of supply test in section 23 of the Enterprise Act 2002 (the Act) is met. The OFT therefore believes that it is or may be the case that a relevant merger situation has been created.
THIRD PARTY VIEWS
Only one third party raised concerns regarding the effect of the proposed acquisition on competition at the national level. Another complained about Tesco's national presence in convenience retailing (through its Express format stores) which the OFT does not consider to be relevant for this merger analysis. No third party told the OFT that the proposed acquisition raised competition concerns at the local level.
ASSESSMENT
The parties overlap in the supply of grocery retailing in the UK. The OFT has not identified any competition concerns at a national level, given the negligible accretion to Tesco's market share of grocery retailing and to its position relative to its suppliers. At a local level, the Acquisition Stores at Battersea and Leyland will face sufficient competitive constraints after the merger to prevent any competition problems from arising. In Millom there is no overlap between either a Tesco store or Tesco-controlled land and the former Somerfield store (and therefore no effect on local competition).
Consequently, the OFT does not believe that it is or may be the case that the acquisition may be expected to result in a substantial lessening of competition within a market or markets in the United Kingdom.
DECISION
This acquisition will therefore not be referred to the Competition Commission under section 33(1) of the Act.
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