How did the competition commission tame the supermarket giants :: Business and Management Studies

How did the competition commission tame the supermarket giantsThe Competition way is an independent public body realisedby the Competition Act 1998. The Competition Commission conductsin-depth inquiries into mergers, markets and the regulation of themajor regulated industries, undertaken in response to a reference madeto it by another(prenominal) authority. The Commission recently had the task ofhaving the power to give one major supermarket chain the go ahead tomerge with Safeway. The proposed acquisition of Safeway by Morrisons,Asda, Tesco or Sainsburys was referred to the Competitive Commissionunder the Fair Trading Act by the Trade and Industry Secretary. TheCommission can consider the opinions of all parties in determinewhether any of the potential mergers is against the public interest.Topics for inclusion in the meeting could include both(prenominal) local andnational issues, including the effect on consumers and suppliers ofany proposed acquisition. The Competition Commiss ion gave Morrisonsthe green light over the other potential buyers such as Asda, Tescoand Sainsburys. This was due to a number of economic reasons. Althoughneither Safeway nor Morrisons was struggling, both agreed the need tomerge was very advantageous. Morrisons was looking for a way to growfar more quickly, and could afford to fund an acquisition to deliver the goodsthat goal as soon as possible.The successful wish well for Morrisons to take over Safeway would mean thatMorrisons would become a major and well-set national player. The mergeshould exert a positive and competitive effect on retail insupermarkets and also benefit the customers. Some people shew theMorrisons bid to be against the public interest in particular localareas where the number of competing supermarkets would be reduced.However, subject to divestment of particular stores in these areas.Morrisons bid for Safeway was allowed to proceed. The CompetitionCommission was given just over four and a half months to in vestigatethe four merger situations. All of these needed to be assessed as totheir likely impact on competition. Mainly in terms of which would bethe most practical to economy. The decision was partly mad byundertaking isochrone analysis, which is mapping and positioning ofstores area by area and the customers they serve. This provideddetailed information on which areas would be affected as a result ofreduced local competition.Morrisons the medium-sized but very fast-growing British supermarketchain takeover of UK rival Safeway deal was worth 2.9bn.The combinedfirm, with 598 stores, a turnover of 12.6bn and a market treat of 16%,aims to be able to compete with Asda, Sainsbury and Tesco, the giantsof the UK supermarket sector. Both Morrisons and Safeway have been