Grocer digs in for a fight

You have to admire Sainsbury’s for refusing to take the Competition and Markets Authority’s (CMA) negative response to its £14bn merger with Walmart-owned Asda lying down.

The grocer won a moral victory over the CMA in the courts when it disputed the timetable for scrutiny of the deal this year. Now Sainsbury’s is limbering up for a battle over alleged errors in the CMA’s analysis.

It says the CMA double-counted Asda’s convenience stores because it mistakenly categorised home shops as food outlets.

It also argues that the CMA moved the goalposts by changing the threshold for competition concerns in local areas.

But the CMA’s previous rulings, in a fastchanging commercial market, are hardly Erskine May dating back to 1604.

Among the suggestions is that the CMA ruling is past its sell-by date as a result of the M&S- ocado joint venture. But, with due respect to Sainsbury’s, two smaller players getting together hardly ranks alongside the creation of the largest supermarket group in Britain, outstripping Tesco.

A more sensible approach than turning on the regulator is Sainsbury’s effort to put flesh on promises to consumers and suppliers. The pledge to deliver £1bn of price cuts by the third year of the deal is attractive.

But it requires some heroic assumptions about the impact of Brexit on food prices, the Sainsbury’s ability to deliver cost savings without wholesale job losses and scope to bully suppliers. one suspects, for instance, that the new unilever boss Alan Jope is not going to be a pushover.

Meanwhile, a promise that small suppliers should be paid within 14 days doesn’t need a merger to be delivered. It ought to be best practice for Sainsbury’s, which has sought to occupy the ethical high ground.

Chief executive Mike Coupe has made compelling broader arguments about online competition and new competitors such as Deliveroo. But when all is said and done, a merger go-ahead would gift Sainsbury’sAsda a dominant market share, and power to set prices once the three-year commitment on cuts on everyday items ends.

Sainsbury’s needs to think more creatively about taking the enterprise forward if the Asda deal fails.

It could consider joint ventures, such as Argos outlets and Sainsbury’s Bank in Asda stores, or forging its own online alliance, perhaps with Amazon/Whole Foods.

Even if you can’t beat them you can still be in the money.

Blackwell travails

LoRD Blackwell has had a gilded career which included a period from 1995-97 as head of the Prime Minister’s policy unit.

Experience of the public sector did not appear to serve him terribly well as chairman of the outsourcing company Interserve for a decade from 2006 to 2016 when bad deals, overtrading, excess pay to executives and financial misjudgements were made.

Nevertheless Blackwell occupies one of the top posts in the City as chairman of Lloyds Banking Group. The job of chairman is often described as the right to sack a chief executive who is off the rails.

Blackwell, rightly, has been tolerant of chief executive Antonio Horta- osorio’s adventurous personal life, recognising his huge talents. But respect for the contribution which Horta-osorio has made to Lloyds may have been a little overdone in respect of pension arrangements.

Horta-osorio is among a group of overrewarded top bankers handed a huge chunk of cash in lieu of pensions. Shareholders are meant to be grateful that Lloyds has taken decisive action to address this discredited practice by cutting the chief executive’s allowance from 46pc of base salary to 33pc.

That still delivers £419,000 cash, compared to the 13pc of salary for other employees and the 10pc cash-in-lieu at far larger and more complex HSBC.

That’s not the end of it. Remarkably, Horta-osorio was until last night the only member of the Lloyds final salary pension scheme closed to everyone else in 2014 by none other than the chief executive himself. Blackwell has a wonderful chance to demonstrate that Lloyds stands for the very best standards.

Why is he waiting?

Scotch mist

LLoYDS’ high-handed manner in dumping Standard Life Aberdeen as investment manager at the bank’s Scottish Widows offshoot is another unforced error.

Not the best of starts for the Black Horse’s joint venture with Schroders in wealth management – uncaring and careless.