The head of the British parliament’s business select committee has written to the nation’s competition watchdog following a recent private equity bid for Morrisons, raising concerns regulatory bodies lack powers to intervene when new owners act badly, reported Reuters.
Last month, Morrisons, Britain’s fourth largest supermarket group after Tesco, Sainsbury’s and Asda – rejected a proposed £5.52 billion (US$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.
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.
“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, wrote in a letter to Andrea Coscelli, the chief executive of the Competition and Markets Authority.
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.
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