Buyer power

8 May 2003

Maybe the Commission is just covering its bases. But if Safeway is a special case, that would be bad news for its shareholders. The Competition Commission hasn’t traditionally been too concerned with the plight of suppliers.

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The Competition Commission is going to consider issues of buyer power and suppliers in relation to the proposed acquisition of Safeway by Tesco, Sainsbury, WalMart and Wm Morrison.

The regulator said it would consider whether a merger would increase buyer power and whether this would cause a reduction in the quality or diversity of products or in the levels of innovation they can attain. The Commission also said that it would examine whether this would have an adverse effect on consumers.

Moreover, the regulator will consider whether an increase in buyer power might have negative effects on smaller grocers because suppliers to the merged entity might seek to recoup their losses through raised prices..

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