In the UK, the Observer reports that there seems to be the beginning of a groundswell of support for the idea that perhaps Tesco – with a more than 30 percent market share, and with one out of every eight pounds spent in at British retailers spent in its stores – should be forced to sell off some of its stores.
The British Office of Fair Trading (OFT) is considering whether to recommend to the Competition Commission that it start a new investigation into UK retailing, responding to complaints that Tesco has gotten too big and too powerful. Those complaints have come from a variety of sources – including independent convenience store owners concerned about reports that Tesco would like to at least double its 600-unit chain of convenience stores over the next decade. Also complaining: Wal-Mart’s Asda Group, which has said that Tesco has an unfair advantage over it in the British marketplace (a complaint that has raised eyebrows and caused knowing smiles among those who know how Wal-Mart dominates other markets).
'We are approaching the technical definition of what constitutes a monopoly,” said Labour MP Jim Dowd. “Therefore regulations have to be considered. We are considering the potential for divestment.”
Lucy Neville-Rolfe, Tesco's company secretary and director of legal and public affairs, tells the Observer: “I think the public interest would need to be looked at in a proper manner by government regulatory authorities and I would hope that when [they] talked to us and looked at our operations in detail they would come to the view that that was a bad idea.”
The British Office of Fair Trading (OFT) is considering whether to recommend to the Competition Commission that it start a new investigation into UK retailing, responding to complaints that Tesco has gotten too big and too powerful. Those complaints have come from a variety of sources – including independent convenience store owners concerned about reports that Tesco would like to at least double its 600-unit chain of convenience stores over the next decade. Also complaining: Wal-Mart’s Asda Group, which has said that Tesco has an unfair advantage over it in the British marketplace (a complaint that has raised eyebrows and caused knowing smiles among those who know how Wal-Mart dominates other markets).
'We are approaching the technical definition of what constitutes a monopoly,” said Labour MP Jim Dowd. “Therefore regulations have to be considered. We are considering the potential for divestment.”
Lucy Neville-Rolfe, Tesco's company secretary and director of legal and public affairs, tells the Observer: “I think the public interest would need to be looked at in a proper manner by government regulatory authorities and I would hope that when [they] talked to us and looked at our operations in detail they would come to the view that that was a bad idea.”
- KC's View:
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Certainly the competitive situation in the UK is different from that in the US, so it isn’t exactly apples-to-apples.
But our first instinct is to tell the Tesco critics what we tell Wal-Mart critics – it is the job of the competition to find new and innovative ways to effectively do battle against even a giant the size of Tesco.
That doesn’t mean that there shouldn’t be every effort to make sure that the playing field is level, and that giant players aren’t able to take unfair advantage of their size. But ultimately, smaller players – whether they are Asda or some guy on the corner with one store – have to find ways to distinguish themselves in the marketplace.
