Wednesday, September 21, 2005

Tesco and Walmart

Even Tesco boss Sir Terry Leahy admits that there are some fair questions about Tesco market dominance.

But surely if there is one person in the whole world who has a bit of a cheek asking these questions, it is Lee Scott, who is the boss of Walmart. Walmart is still the world's biggest retailer, is the dominant retailer in the US, and owns Asda in the UK.

However, before we write off Scott as a total hypocrite, here are some reason why he feels things are unfair.

1. Tesco has a much higher market share in the UK than Walmart has in the US. And yet Walmart seems to attract a much higher level of hostile criticism and campaigning. (Just try an Internet search if you don't believe me.)

2. Walmart/Asda was prevented from buying Safeway because this would have resulted in a 29% market share. Tesco now has a 30% market share. (Not surprisingly these figures are disputed.) Why do the UK regulators permit the latter when they wouldn't permit the former? (There are of course several ways of answering this question.)

What is the purpose of this kind of regulation? One way of thinking about it is as an attempt to exert some form of ethical and social influence over economic market forces. And it is the complex interaction between ethical, social and economic forces that makes this kind of situation so interesting.

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