Commission may not allow further food takeovers

The likelihood of further significant consolidation in the food retail sector is slim following the Competition Commission's judgement on the proposed bids for Safeway, analysts say.

Charles Stanley retail analyst Simon Proctor believes that the regulatory authorities will take a much firmer stance on proposed mergers in the sector.

He said: 'The logical conclusion, (following the sale of Safeway) was that the smaller players (in the food retail market) would be swallowed up by the big players. I am not sure if that will happen, because it is unlikely that the Competition Commission would allow it. I think that if the T&S sale to Tesco had happened a year later it would have been blocked.'

Retail Knowledge Bank research director Robert Clark said that the big food retailers might look at acquisitions in other sectors. He said: 'Tesco and Asda will keep growing organically, but they could look at other potential opportunities, such as Matalan.'