Somerfield is to appeal against the Competition Commission’s (CC) ruling that it has to sell 12 of the stores it recently purchased from Morrisons.

The CC argued that in 12 locations Somerfield’s competitors are not sufficiently strong to prevent market abuses occurring, something that Somerfield has strongly denied. The multiple is challenging the CC on three key issues. Firstly, it disputes the rationale that there has already been a “substantial lessening of competition” in the areas concerned; secondly it challenges the instruction that it must dispose of the 12 specific stores, rather than any outlet within the relevant catchment area; and finally that it must sell the stores to buyers approved by the CC rather than, for example, a local independent.

While the decision to appeal has no connection to the ACS appeal (see left), it is yet another example of the trade’s dissatisfaction with the current competition regime, and will increase the pressure on politicians to take a fresh look at the way the market is policed. The CC’s ruling on Somerfield effectively says that the local grocery markets in the 12 areas concerned would only be competitive if the stores were run by one of the big four multiples, and not if run by either Somerfield or an independent. Of the 12 stores under scrutiny, one is a c-store, with most of the others in the mid-range bracket.

Somerfield’s initial response to the CC, released in August, revealed the company’s frustration at the current competition regime. Referring to Tesco’s takeovers of T&S and Adminstore and Sainsbury’s acquisition of Jacksons, the response said: “The OFT cleared the purchase by 2 of the 3 largest grocery retailers in the UK of over 1,000 convenience stores. In these circumstances it is utterly peverse to override the jurisprudence relating to over 1,000 convenience stores in order to block the acquisition by the fifth largest player of just one.”

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