Completed acquisition by Tesco plc of a former Co-op store in Slough

Affected market: Supermarkets

No. ME/1344/03

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 19 April 2007. Full text of decision published 9 May 2007.

PARTIES

Tesco plc (Tesco) is part of Tesco Group. Tesco Group operates grocery stores in Europe, Asia and the UK. Tesco is the largest grocery retailer in the UK and also sell certain non-grocery items, including petrol, tobacco and newspapers.

The Co-operative Group (CWS) Ltd (the Co-op) operates a variety of retail operations and services in the UK, including grocery retailing.

TRANSACTION
 
Tesco acquired a Co-op store on Uxbridge Road, Slough (the Uxbridge Road site) on 10 October 2003 [see note 1]. One reason for doing so was to facilitate the expansion of Tesco's existing site on nearby Brunel Way, Slough (the Brunel Way site) over a number of months without loss of a Tesco store for a period in Slough. Following a complaint from local consumers, the OFT launched an investigation into this acquisition.

JURISDICTION

As a result of this transaction, Tesco and the Uxbridge Road site in question ceased to be distinct. The parties overlapped in the supply of groceries, in particular one-stop shopping as defined in the report by the Competition Commission (CC) on the proposed bids for Safeway (Cm 5950; the Safeway report), and the share of supply test in section 23(2)(b) of the Enterprise Act 2002 (the Act) was met. A relevant merger situation had therefore been created.

ASSESSMENT

The planning issues in relation to the Uxbridge Road site have now been resolved for over twelve months and the suspension of the OFT's duty to refer is now entering its fourth year. The time period for meeting the terms set by the OFT in its 2 February 2007 letter expired earlier this week and no suitable UIL proposal is currently on the table: as set out above, unfortunately neither of the two proposals advanced by Tesco can be considered clear cut and capable of ready implementation.

Tesco has requested an extension while the OFT's above concerns could be resolved pending public consultation on the draft undertakings package in conjunction with the proposal of the purchaser discussed above. Given the substantial uncertainties that still persist in relation to the one proposal potentially capable of consideration, the OFT not convinced that a short extension would allow these issues to be resolved; nor is there any clear reason why such an extension would be appropriate in light of the extensive periods from which Tesco has already benefited.

The OFT therefore concludes that it would be inappropriate to suspend its duty to refer any further given all the present circumstances of the case.

DECISION

The OFT's duty to refer is no longer suspended and the acquisition of the Co-op store in Uxbridge Road, Slough will therefore be referred to the Competition Commission under section 22(1) of the Act in accordance with the February 2004 Decision. Pursuant to section 25(5)(c) of the Act, upon reference to the Competition Commission, the ongoing extension to the duration of the statutory time limit in section 24(1) will be cancelled.

NOTE

1. Tesco entered into a binding agreement to acquire the Uxbridge Road site on 16 July 2003. Completion of the acquisition took place on 10 October 2003.

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