Wal-Mart CEO Calls for Government Intervention to Prevent Market Dominance
Scott calls for probe into dominant Tesco in Britain
By Richard Fletcher
First published by The London Times, August 28, 2005
The increasing dominance of Tesco in Britain needs to be probed by the government, Lee Scott, president and chief executive of Wal-Mart has declared.
Figures published last week by TNS, the market-research company, showed that under Sir Terry Leahy Tesco's share of the food market had increased to a record 30.5% over the past three months.
In an interview with The Sunday Times, Scott, who owns Asda in Britain, said that it was time for the government to act.
"As you get over 30% and higher I am sure there is a point where government is compelled to intervene, particularly in the UK, where you have the planning laws that make it difficult to compete," said Scott. "At some point the government has to look at it," he added.
Editor's note: According to Talbot Consultants International, a Toronto-based research firm, Wal-Mart controls 52% of all department store sales in Canada.
Scott's comments are likely to be taken seriously by the government, with which Wal-Mart has a good working relationship. Asda is Britain 's No 2 supermarket group with 16.7% of the food market.
Concerns about Tesco's dominance have been growing in recent months.
Last month Sir Ken Morrison, chairman of the Wm Morrison supermarket chain, told City analysts that Tesco was using selective discounts to lure shoppers from his newly refurbished stores. Sir Ken cited the example of the Isle of Wight, where, after the opening of a new Morrisons store, Tesco had sent vouchers giving shoppers £15 off every £40 spent - a discount of almost 40%.
Local pricing - where consumers in areas with little competition subsidise people in more competitive areas - is frowned on by competition regulators.
Tesco is also facing battles with groups representing consumers opposed to the development of new stores.
In June Leahy hired David Yelland, former editor of The Sun, to help advise on public relations.
In the interview Scott also revealed that Asda is looking at the possibility of opening smaller convenience stores in an attempt to tackle the growth of the Tesco Metro format.
"A lot of Tesco's growth has come from the small convenience chain. Andy (Bond, the chief executive of Asda) and his team have got to look and see where the opportunity is for us with that kind of space," he said.
"There are no limits, all we want to do is serve customers. We run multiple formats in different countries. In Mexico we are the second-largest restaurant operator," he added.
If Asda does push ahead with the new format, it is certain to test the concept first. Some have speculated that Wal-Mart plans to buy the Somerfield supermarket chain.
Lucy Neville-Rolfe, corporate and legal affairs director and company secretary at Tesco, said: "Previous Competition Commission inquiries have found that the market - and Tesco - operates in the consumer interest. It is a competitive market. The consumer is the winner."
In America Wal-Mart has 10% of the retail market.
© 2005 The Times
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