Business committee writes to CMA over private equity takeover concerns
A spate of recent private equity interest in the UK’s supermarkets has prompted the chair of the parliamentary business committee to question whether the competition watchdog has sharp enough teeth to deal with such bids.
Over the weekend, buyout specialists Clayton, Dubilier & Rice made an unprompted £5.5bn offer for Morrisons, which rejected the bid.
But the move provoked panic in some quarters, with the Labour Party saying that the government should intervene in any takeover.
Now Darren Jones, the business select committee’s chair, has written to CMA chief executive Andrea Coscelli to check the “scope of [the CMA’s] regulatory powers” to investigate such deals.
Such bids can often lead to widespread restructuring programmes and swingeing job cuts, he added.
“Following the recent purchase of Asda using significant amounts of debt and the increased interest
from private equity companies in British supermarkets, including the recent bid for Morrisons, I’m
writing to ask for your opinion on the scope of your regulatory powers to investigate such matters”, he wrote.
“Given previous highly leveraged purchases of high street brands, which have ultimately resulted
administration, job losses and pension fund shortfalls, there is concern that regulatory bodies have
insufficient oversight or powers to intervene when new owners act irresponsibly.”
Earlier this year the Issa brothers agreed to buy Asda for £6.8bn in a deal largely funded through debt financing.
The CMA opened an investigation into the purchase due to a separate deal that would have seen the Issas add Asda’s petrol stations to the portfolio of EG Group, which they also own.
But fears that such a deal could lead to higher petrol prices for drivers were assuaged when the brothers said they would sell 27 Asda petrol stations, with the CMA then waving through the deal.