Compaq Dixons deal sparks row

A row has erupted between UK computer retailers and Compaq, the world’s biggest PC maker, over a proposed deal to sell Compaq computers exclusively through the Dixons Stores Group (DSG).

Kingfisher, which owns Comet, the second largest electrical retailer, is threatening to use its buying power in Europe to force Compaq to back down on UK plans to sell computers only in DSG-owned chains Dixons, Currys and PC World from the end of January.

Compaq announced in July it was to review its distribution arrangements country by country following a fall in sales in sharp contrast with make-to-order competitor Dell.

Rival computer seller Tempo has consulted lawyers over the legality of the deal, which it claims would breach competition laws because of Currys and Dixons share of UK PC sales.

The John Lewis Partnership has raised the issue with the Office of Fair Trading and is awaiting a reply. Compaq has consulted its own lawyers and is convinced the deal will go through.

Tempo deputy chairman Michael Kraftman says: “Our lawyers have said the deal would breach three separate competition acts. There’s no question that if there was a deal it would restrict competition.”

A Dixons spokeswoman says: “There was a deal organised weeks agoä it hasn’t yet been confirmed.”

Compaq refused to comment.

The row comes after the Office of Fair Trading ruled this week the UK market for personal computers is competitive following a ten-month investigation. John Bridgeman, director-general of fair trading, says no single manufacturer or retailer has market power and he will not refer the market to the Competition Commission.

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