Leading MP questions potential UK supermarket buyouts

The chairman of Parliament's business committee has written to the UK's competition regulator raising concerns about private equity interest in British supermarkets after the purchase of Asda and a bid for Morrisons by buyout firms.

Darren Jones has asked the Competition and Markets Authority what powers it has to investigate debt-funded takeovers of supermarkets and to set out its view of these powers. The Labour MP has also written to the Financial Reporting Council.

Jones, who chairs the business, energy and industrial strategy committee, said previous purchases of high street brands had resulted in administration, job losses and pension fund shortfalls. He said he was concerned that regulators did not have enough powers to intervene when new owners are irresponsible.

Private equity firms are snapping up UK listed companies they see as undervalued and have turned their attention to leading supermarkets. TDR Capital has bought Asda from Walmart with the billionaire Issa brothers and on 21 June Morrisons rejected a £5.5bn offer from Clayton, Dubilier & Rice.

Morrisons is now "in play" as a takeover target and CDR is considering its options. Analysts have said bigger grocers Sainsbury's and Tesco could also attract bid attention.

Jones said: “British supermarkets are the latest area of interest for private equity and other buyers using significant amounts of debt. Some stakeholders have raised concerns about what this might mean for the protection of jobs, pension funds and supermarkets' presence on British high streets.

"I am keen to understand what regulatory oversight is in place to ensure any future transactions protect consumers and workers. I’m therefore asking the Competition and Markets Authority and the Financial Reporting Council for their views on this issue.”

Morrisons shares were down 1.95% to 241.9p at 13:42 BST.