Littlewoods’ 367.5m bid to buy Sears-owned Freemans has been blocked by the Government, following the recommendation by the Monopoly & Mergers Commis-sion that the merger would be against the public interest.
The decision of Margaret Beckett, President of the Board of Trade, positions Littlewoods and Freemans in the agency sector of the home shopping market – meaning it uses agents to sell from catalogues, rather than selling direct. Littlewoods, however, says it believes its bid should be con-sidered on the basis of non-food retail market share. The combined home shopping business of the two companies would amount to 2.3 per cent.
Beckett says: “The merged company and the current market leader, Great Universal Stores, would have over 80 per cent of agency mail order sales between them. This could be expected to reduce the level of existing competition significantly, leading to a detrimental effect on choice, prices or efficiency in the agency mail order market.
“The MMC found that neither the high street, nor other forms of home shopping – particularly direct mail order – can be regarded as adequate substitutes for agency mail order.”
Sears says it will prepare Freemans for flotation within two years. It has been desperate to sell the division since the catalogue operation suffered a seven per cent fall in profits to 38.3m in 1996.