A letter of complaint has today been sent to the Office of Fair Trading by the Association of Convenience Stores (ACS) in regard to the Tesco takeover of Mills Group.
ACS wants the proposed merger to be blocked on the grounds that consumers’ interests will be harmed by Tesco further expanding its convenience store portfolio in the One Stop shop format.
Last month’s deal means 77 stores currently under the Mills Group will be rebranded by Tesco, increasing its One Stop store numbers to 598 across England and Wales.
James Lowman, CEO of ACS, commented: “If Tesco sought to take over a company operating 77 large supermarkets then it would be subject to a full investigation and would most likely be blocked. We fail to see any reason why this merger should be treated differently.
“Now is the time to take a look at the broad implications of this growth for consumer choice.”
One Stop has been criticised previously for charging higher prices than at larger Tesco branded stores but the UK’s largest retailer has always maintained that this is justified as it is a separate business with its own costs and margins.
All of the major supermarkets in the UK are looking to expand their convenience store portfolios, seeing this as the best way to push their businesses forward as available retail space for large projects and future sales growth both begin to look scarce.
Lowman added: “A series of takeovers of convenience store groups have taken place over the past eight years and none have been subject to a full competition investigation. In that time Tesco has grown from a convenience store estate of around 80 stores to over 1,700 today.
“The authorities should satisfy themselves that Tesco operation of the One Stop brand is in the consumers’ interest. To do this they must undertake a full comparison of price, quality, range and service, and satisfy themselves that consumers are not being disadvantaged.”
A decision on regulatory approval of the deal is expected to be made in the spring of this year.
David Turner, CEO of One Stop, speaking at the time of the takeover announcement, said: “Acquiring 77 Mills stores means we can introduce One Stop’s quality, range and value to the communities they serve.
“We’ll be investing in refurbishing the stores, creating an even better shopping experience, as well as bringing down prices.”