GUS sale referred to Competition Commission

Friday, 26 September 2003 6:06 AM

Trade and Industry Secretary Patricia Hewitt has ordered a full competition commission inquiry into the purchase of the GUS home shopping network by March UK, the firm run by the Barclay brothers.

The commission will investigate for the 450 million pounds purchase by Sir David and Sir Frederick Barclay back in May.

The brothers planned to merge the operations of catalogues including Kays, Great Universal, Argos Additions, Marshall Ward and Littlewoods All-Inclusive.

The Barclay brothers own a large chunk of the Littlewoods group after buying the firm for 750 million pounds last year.

Ms Hewitt said on the back of advice from the Office of Fair Trading, she would refer the purchase to the commission given the "significant prospect of a substantial lessening of competition in mail order and the related activity of business-to-consumer parcel delivery."

A GUS/Littlewoods tie-up would mean the new entity would be three times the size of next largest rival, Ms Hewitt said, and would dominate over half of the business-to-consumer parcel delivery business.

The Competition Commission will report by December 23.

Analysts had forecasted that a referral was likely after a similar merger between Littlewoods and Freemans was blocked in 1997.

David Simons, chairman of Littlewoods said he was confident of winning over the commission.

"The game has changed since 1997. Mail order has been in steep decline and it is no longer the only source of credit for people who can't get it elsewhere. It is pretty clear GUS would have closed the business had it not found a buyer and since then nobody has exactly been beating a path to out door to buy it."

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