UK Business Express could be sold
Patricia Hewitt, the Trade and Industry Secretary, must decide by January 23 whether to force Sir David and Sir Frederick Barclay to sell or close the home shopping business they bought from GUS last May.
The Competition Commission completed its inquiry into the Pounds 590 million deal before Christmas, submitting its conclusions to Ms Hewitt on December 23. The Secretary of State is allowed 20 working days from that date to make a decision.
It is expected that at the least the commission will require the Barclays’ acquisition vehicle, March UK, to sell Reality, its parcel delivery business.
Alternatively, it may ask the Barclay brothers to sell off the equivalent arm of their Littlewoods home shopping group, Business Express. The commission is concerned that the combined businesses will have a significant share of the home delivery business, restricting competition.
However, it is likely to be exceptionally difficult to separate the delivery businesses from their respective parent groups. One home shopping industry consultant said: “Their warehouses are set up to handle their own mail order business, with parcel delivery for other companies being added on to take advantage of the existing capacity. It would be impossible to disentangle.”
If the acquisition of the former GUS home shopping business, now known as Shop Direct, is given the go-ahead, it will create a group with an annual turnover of about Pounds 3 billion -of which GUS makes up about Pounds 1.7 billion.
In November the commission also said it was considering other remedies to address competition concerns. These included the sale of all or part of its home shopping catalogue business, which owns the Kays, Choice and Marshall Ward catalogues.
Even if the Barclay brothers are allowed to keep Shop Direct, restructuring at the group, badly affected by the decline in some areas of home shopping, is expected to include heavy job losses among the 19,000 workforce, concentrated in the North West of England, the Midlands, Yorkshire and Wales.
