Comic commission won’t spare Morrisons a mauling

Sir Ken may have the all-clear to buy Safeway, but the authorities’ inept approach will allow the big three to use all their tricks to spoil his party, says George Pitcher

There is something delightfully comic about the takeover battle for Safeway, as though it was being shot in monochrome at Ealing Studios.

Sir Ken Morrison, of family firm Wm Morrison, would have been played by someone like Norman Wisdom – who wouldn’t, of course, have been the real Sir Ken, but would have been catapulted into his position from a job as Sir Ken’s gardener by an unlikely case of mistaken identity.

In the final frame, having taken on the big shops and won, the hapless “Morrison” would have wrung his cloth cap in his hands and, with the lovely daughter of all-round-rotter Sir Asder Tescow-Sanesbury looking on admiringly, given a speech that concluded: “All I wanted was for the little children to have good, cheap food like what they used to.”

Yes, I know the real Morrison is a serious businessman, who has played his hand with the regulators with skill and determination. Nor do I seek to suggest, just because his company is from the North, that he has a cloth cap.

But it is still a whimsical piece of drama for this David to have taken on the Goliaths. And to have won through, with the assistance of the dry suits at the Competition Commission and tremulous trade secretary Patricia Hewitt, is especially in keeping with the British affection for the underdog.

What is far less funny is the real story on which this comic drama is based. Rather as geriatric-lady murderers were not as charming as they were portrayed at Ealing, and Fifties cops and villains were certainly not as decent and chirpy-cockney as their on-screen personas, nor is the story on which the bid for Safeway is based funny or whimsical at all.

Attention has focused on the ruling of the Competition Commission, endorsed by Hewitt, that the emergence of a fourth major competitor in the grocery-superstore market, formed by a merger of Morrison and Safeway, will be healthy for consumers and the trade.

It has suited the regulators that attention has been so focused. This way, the Competition Commission and its sidekick, the Office of Fair Trading (OFT), look like the responsible friends of both the public and the supply trade.

Suppliers, in particular, have joined in, saying in the wake of the ruling things like “the consumer will benefit from four evenly matched retailers” and “further consolidation will benefit consumers and suppliers”.

But we all know that, in the brutal, real world of the mega-retailers, the competitive techniques that will be deployed against a fourth major competitor will include supplier intimidation, intellectual property theft and profit-margin blackmail.

Suddenly, I don’t hear anybody laughing. The Competition Commission’s report on the Safeway affair alludes to some of these nefarious practices, but has a regulatory self-interest in not making too much of an issue about it.

The Code of Practice that the commission put in place a couple of years ago, in the wake of an insipid and pusillanimous investigation into the treatment of the retail grocery trade’s supply arrangements, is half-heartedly policed by the OFT, which really is a police force in the Ealing mould.

All that a fourth entrant into the big retail game will do is to encourage the majors to beat up on suppliers even harder, in order to protect their competitive edge. Let me provide a couple of examples from this gangster-like world.

A supplier of plastic-moulded packaging to supermarkets has told me of a customer that has routinely put its contract up for tender. Nothing wrong with that, of course, but the client has then proceeded to take the lowest tender from a competitor and impose it on the incumbent supplier.

That supplier is consequently constrained and compromised qualitatively on budgets for matters such as research and development and health and safety – risks it is has to carry alone.

Similarly, another supplier speaks of being invited to pitch for a supply contract, only for the intellectual property of its tender document to be plundered and its content delivered to a more keenly priced competitor, with a demand that the latter delivers to that particular specification.

These suppliers are, predictably, unwilling to blow the whistle publicly, for fear of punitive retributions from their customers. Given the historical weakness of the regulators in cracking down on such practices, it is hardly surprising that suppliers opt for keeping their heads down and suffering in silence.

In the past, the OFT has contacted me to ask for the names of such culprits and their suppliers. It did so when I recorded some years ago one superstore’s habit of snaffling for itself the cut-price offer that a whisky distiller was making for the Christmas market (MW November 29, 1996).

This reminds me of the line from Monty Python, when the police are tracking down the notorious Piranha Brothers: “We followed their every move by reading the colour supplements.”

We columnists are not the police, nor are we their snouts. If the OFT and other regulators want to know what really goes on in the retail trade, they need to get out from behind their codes of practice, get their hands dirty and recruit their own informants.

And they might like to do it before Wm Morrison has to learn its trade alongside the big boys.

George Pitcher is a partner at communications management consultancy Luther Pendragon

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