Supermarket merger jeopardises vitality of Sutton High St - Burstow

11.00.00am GMT Thu 16th Jan 2003

Local MP Paul Burstow has today written to the Secretary of State for Trade and Industry expressing his grave concerns at the possibility of a merger between Safeway and Wal-Mart as he fears that it would jeopardise the new Asda supermarket being built at the bottom end of Sutton High Street or lead to the closure of the Safeway at the top end of the High Street.

Wal-Mart, the largest retailer in the world who also owns Asda, is considering a takeover bid of Safeway. The company has admitted that if its bid were to succeed that certain supermarkets would have to be 'disposed of'. Paul Burstow believes that as the two supermarkets would be in close proximity to each other it is likely that one of them would be axed. Mr Burstow has written to the Rt Hon Patricia Hewitt MP to call for any possible merger to be investigated by the Monopolies and Mergers Commission and the Office of Fair Trading.

Paul Burstow said:-

"It was good news for Sutton when Asda decided to invest in one of its first High Street stores. It was a sign that perhaps the tide was turning against the out of town shopping centre that has done so much to destroy traditional town centre shopping. The news that Asda are now weighing in to the takeover battle for Safeway is not good news for Sutton."

"If a merger were approved between Asda and Safeway there must be a real question mark over the company retaining both stores in Sutton town centre. That would be bad for residents, and bad for the town.

"An Asda takeover of Safeway would mean that Sutton residents would have less choice about where to do their weekly grocery shopping. I want the Secretary of State to step in to protect the consumer from powerful supermarket interests and ensure that Sutton shoppers continue to have a choice between supermarkets in the High Street."

ENDS

Notes to editor

Copy of the letter to Rt Hon Patricia Hewitt MP enclosed.

The Rt Hon Patricia Hewitt MP

Secretary of State for Trade and Industry

Department of Trade and Industry

1 Victoria Street

London SW1H 0ET

Our ref: Hewitt/160103/rcd

January 2003

I am writing to express my concern over the recent media stories concerning a possible takeover of the Safeway supermarket chain by a rival company.

One of the names mentioned as a possible buyer is Wal-Mart who, as you will most certainly be aware, already owns the Asda chain. I am very concerned about the monopoly implications of such a takeover by Wal-Mart or any other giant in this market and I would like to flag up the specific example of the main High Street in my Sutton constituency.

At the present time Safeway has an important presence at the top of the High Street while Tesco used to have a large store at the bottom. Tesco has now sold this site to Asda who are in the process of completely rebuilding an extensive new development that should be completed early next year.

Clearly if Wal-Mart were to take over Safeway, they would have no interest in maintaining two identical stores in the same High Street. The company has already admitted that, if its bid were to succeed, certain supermarkets would have to be "disposed of". This would have serious implications for consumers, both from the point of view of easy pedestrian access to a store if one were to close down, but also from a price perspective. Less competition means higher prices and less choice and, as always, it would be the consumer who pays the price.

I trust you will look into this matter very carefully and consider the implications nationally of such a takeover. I believe this possible scenario in Sutton could be repeated across the country to the detriment of consumers and the principles of a competitive market. I would urge you to call for any possible merger to be investigated by the Monopolies and Mergers Commission and the Office of Fair Trading.

I look forward to hearing from you in due course.

Best wishes,

PAUL BURSTOW

Member of Parliament for Sutton and Cheam