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Market consolidation and pricing developments in grocery retailing: a case study
chapterposted on 01.05.2015, 08:51 by Ratula Chakraborty, Paul W. Dobson, Jonathan Seaton, Michael Waterson
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When large retailers merge, there is a concern that a sudden and marked increase in concentration will alter the intensity and nature of price competition to the detriment of consumers. This chapter considers just such a situation in regard to UK grocery retailing, which has witnessed steadily increasing concentration over recent years, advanced by a series of mergers. Specifically, we examine the nature of price competition amongst the major “one-stop-shop” retail chains before, during, and after the Safeway/Morrison merger in March 2004.We find the merger offered consumers an immediate windfall benefit — with average prices falling straight after the merger — and more intriguingly appears to have led to (or at least is associated with) a marked change in the character of price competition in the market.
This work was supported by the Economic and Social Research Council (grant number RES-062-23-1962
- Business and Economics