The announcement earlier this week that wholesale giants Today's Group and Landmark are planning to merge may cause further headaches for the UK's Competition and Markets Authority (CMA), which is already bogged down with the minutiae of the Asda-Sainsbury's merger, according to Clive Black of Shore Capital Stockbrokers.
On Monday, Today's and Landmark announced their plans to form a new merged entity called Unitas Wholesale, with a members' vote on the measure set to take place on September 6, with a view to the two companies formally merging over the course of next year.
“We believe that this consolidation is narrowing the options for suppliers and potentially threatening the future of independent businesses as multiple chains expand into the wholesale channel,” Today’s managing director Darren Goldney commented.
After The Tesco-Booker Merger
According to Shore Capital's Black, the recent clearance of the Tesco-Booker merger by the CMA has in many ways opened the floodgates for a wave of consolidation in the UK sector.
"The unconditional clearance of Tesco’s merger with Booker has left a hefty legacy for the organisation, structure and so competition of the UK grocery and wholesale channels and so choice for shoppers and commercial terms and relations for the respective supply chains," Black said in a briefing note.
"Quite whether or not the CMA planned such an outcome, well who knows. However, should we be, are we, surprised by the explosion of consolidation and organisational change following this clearance? No."
Commercial Consequences
He noted that the proposed Today's-Landmark deal would likely be beneficial for the lawyers appointed by the CMA to assess "yet another investigation", while "wholesalers, independent retailers and suppliers alike have to live with the commercial consequences" of the CMA's decisions.
"It is clear to us that the string of corporate activity that is rapidly concentrating the British wholesale and supermarket scene is a legacy of the CMA's questionable decision making, in our view, most particularly on Tesco-Booker."
In the note, Black suggested that the CMA is now "entering territory where it is justifying and engineering oligopoly and duopoly" and suggested that perhaps it was time that the Authority underwent a review of its own.
"Maybe it is time that in the interests of the public, a functioning Government, if we have one, undertakes a fundamental and common sense review of the CMA?," he wrote.
© 2018 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: European Supermarket Magazine.
