UK lawmaker writes to regulator over Morrisons bid concerns

Reuters

Published Jul 01, 2021 08:28AM ET

Updated Jul 01, 2021 09:16AM ET

LONDON (Reuters) - The head of the British parliament's business select committee has written to the competition watchdog following a recent private equity bid for Morrisons, raising concerns regulatory bodies lack powers to intervene when new owners act badly.

Last month, Morrisons - Britain's fourth largest supermarket group after Tesco (OTC:TSCDY), Sainsbury's and Asda - rejected a proposed 5.52 billion pound ($7.62 billion)cash offer from Clayton, Dubilier & Rice (CD&R).

However, shares in the grocer, which trades from about 500 UK stores and employs 118,000, have since risen by over a third on hopes of a raised bid from CD&R or offers from other private equity suitors or Amazon.com Inc (NASDAQ:AMZN).

Asda was taken private in February, when Zuber and Mohsin Issa and private equity group TDR Capital completed their purchase of a majority stake from Walmart (NYSE:WMT) Inc.

"There is concern that regulatory bodies have insufficient oversight or powers to intervene when new owners act irresponsibly," Darren Jones, an opposition Labour Party lawmaker and chair of the Business, Energy and Industrial Strategy Committee, said in a letter to Andrea Coscelli, the chief executive of the Competition and Markets Authority (CMA).

He noted previous purchases of high street brands using significant amounts of debt, which have ultimately resulted in administration, job losses and pension fund shortfalls.

"Can you please set out which (if any) issues here merit further consideration by the CMA? Please could you also advise what powers you currently have to deal with such issues, and/ or identify what new powers you think ought to be considered so that these issues can be addressed?"

Last week Labour called on the government to confirm it will intervene in any private equity takeover of Morrisons to secure binding commitments about the buyer’s business plan, on jobs and on pensions.

The government has powers to intervene in takeovers of companies on grounds including competition, media plurality, national security and pandemic response.