Convenience retailer Haldanes has issued proceedings in the High Court against leading supermarket group The Co-operative, it has emerged today.
The action refers to the 26 former stores of the now defunct grocer Somerfield, which Haldanes bought from Co-op following a ruling by the Office of Fair Trading (OFT).
Haldanes has accused Co-op of misleading it in relations to the previous performance of the stores it has acquired and says that the mutual retailer has breached key terms of the agreement that was made.
As a consequence Haldanes, which employs 600 staff members across the country, has had to invest around £2 million pounds into its business to save it from collapse.
Arthur Harris, CEO of Haldanes, commented: “It is my firm and honest belief that the ‘caring, sharing’ public image and ethical stance portrayed by the Co-op is an utter fallacy.
“Co-op has made me their ‘whipping boy’ for stores which they were struggling to find a buyer for, but which they needed to sell, to avoid competition issues.
“Co-op has sold me, customers in 26 local markets, and quite possibly 600 of their former employees down the river in order to do its deal with Somerfield while cynically weakening the competition their own stores face in these localities.”
The OFT ruled at the time of Co-op’s purchase of the Somerfield business that due to competition law it would have to sell of a number of stores.
Haldanes agreed the purchase of 26 of these outlets in late 2009, early 2010, and since September last year Harris has been trying to organise a meeting with Co-op but has received no reply from the company.
Harris added: “We think that the Co-op believes that, as the OFT decision to allow the Somerfield acquisition without a reference to the Competition Commission is now more than two years old, issues arising from the deal are now sufficiently remote not to have any implications.
“We believe that the Co-op would much prefer to see Haldanes go bust than address the issues arising as, we calculate, this could represent as much as £10 million bottom-line annual profit for the Co-op.
“The Co-op has a real interest in driving Haldanes out of business.”
Haldanes recently unveiled its new supermarket format UGO in February, with around 20 stores currently trading under this name.