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Supermarket mergers – why ever bigger is not necessarily always best

30/04/18
Dan Crossley

The proposed merger of Sainsbury’s and ASDA has implications throughout the food system, says Dan Crossley, Executive Director, Food Ethics Council.

Supermarket mergers – why ever bigger is not necessarily always best

 

For any potential merger of two large organisations, instead of asking ‘what would it mean for the consumer’, we should instead be asking ‘who would it empower, who would it disempower, and how would it help or hinder progress towards fair, healthy, humane, sustainable food systems?’

The ‘success’ of food company mergers tends to be judged more on the size of potential ‘synergies’ (largely a euphemism for job losses and squeezing suppliers) than on the ‘fit of values’ and whether it contributes to a fairer food system. That must change.

If we are to build a resilient food system, isn’t it time we woke up and realised that the ‘economies of scale’ argument too often creates more problems than it solves? We risk ‘too many eggs in one basket syndrome’ at a time when we’re likely to see more shocks to the food system in the future, not least driven by climate change.

The Competition and Markets Authority has vital questions to answer. Do we want a grocery market in the UK where just shy of 70% of the market is shared by only three companies? Surely the CMA’s remit needs to be made fit for the 21st century by ensuring it has to consider likely impacts on key groups affected, including employees, farmers, food manufacturers, the environment and the general public.

The promise of ever cheaper prices - while at first sight may seem appealing - hides issues of who or what is being exploited in order to be able to deliver those lower prices. The costs of bringing food to the table are not reflected in the prices we pay at the checkout - and they should be.