PROPOSED ACQUISITION BY TESCO PLC OF SAFEWAY PLC
UNDERTAKINGS GIVEN TO THE SECRETARY OF STATE FOR TRADE
AND INDUSTRY PURSUANT TO SECTION 88(2) OF THE FAIR TRADING
ACT 1973 BY TESCO PLC
Tesco plc hereby gives to the Secretary of State for Trade and Industry pursuant
to section 88(2) of the Fair Trading Act 1973 the following undertakings for the
purpose of remedying or preventing the adverse effects specified in the report of
the Competition Commission entitled Safeway plc and Asda Group Limited
(owned by Wal-Mart Stores Inc); Wm Morrison Supermarkets PLC; J Sainsbury
plc; and Tesco plc – A report on the mergers in contemplation (Cm 5950 2003).
1. Prohibition of Acquisition of Safeway
1.1. Except with the prior written consent of the OFT, Tesco shall not, directly
or indirectly, hold, acquire or use:
(i) any Interest in Safeway (other than any investments made in
Safeway plc in the ordinary course of the operation of any Tesco
related employee benefit and pension fund of not more than 3 per
cent in aggregate of the issued equity share capital in Safeway plc
which carries no more than 3 per cent of the voting rights
exercisable at meetings of Safeway plc);
(ii) any Interest in any person having control, from time to time, of
Safeway (other than any investments made in the ordinary course
of the operation of any Tesco related employee benefit and
pension fund of not more than 3 per cent in aggregate of the
issued equity share capital in any such person having control of
Safeway, whose shares are listed or dealt with on any recognised
investment exchange, which carries no more than 3 per cent of
the voting rights exercisable at meetings of such person); or
(iii) any Safeway Assets, or part thereof, or collection of Safeway
Assets, or any interest in or derived from any Safeway Assets or
part thereof, the acquisition of which, in the view of the OFT, may
be capable of giving rise to the adverse effects specified in
paragraph 1.22 of the CC Report.
For the avoidance of doubt, the prohibitions in paragraph 1.1(iii)
above shall continue to apply regardless of who owns or has an
interest in or derived from the particular Safeway Asset or part
thereof at the relevant time.
1.2 Tesco:
(i) shall procure that none of its employees or directors holds any
directorship or managerial position in Safeway or in any company
or other business carrying on or having control of Safeway from
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time to time, unless that person has ceased to be an employee or
director of Tesco; and
(ii) shall not nominate any person to any such directorship or
managerial position.
1.3 Tesco shall not participate in the formulation or making of, or (other than
in the ordinary course of business) influence or attempt to influence, the
policy of Safeway or the policy of any person carrying on or having
control of Safeway.
1.4 Except with the prior written consent of the OFT, Tesco shall not enter
into or carry out any agreement or arrangement with any person, if the
carrying out of the agreement or arrangement is intended to result, or will
result, in any Associated Person, directly or indirectly, doing any of the
things listed in paragraphs 1.1 – 1.3 above.
1.5 Conditional upon Morrison acquiring Safeway plc, nothing in paragraphs
1.1 – 1.4 above shall prevent Tesco acquiring one or more of the
Divestment Stores or an interest in or derived from one or more of the
Divestment Stores, if the OFT gives its consent to such an acquisition or
acquisitions provided that, if Tesco acquires one or more of the
Divestment Stores or an interest in or derived from one or more of the
Divestment Stores, Tesco shall not, within a period of two years from the
date of the acquisition of the Divestment Store in question, or the interest
in or derived from the Divestment Store in question, dispose of that
Divestment Store or any interest therein or derived therefrom other than
to an acquirer approved in advance by the OFT in writing.
Provision of Information
2. Tesco shall provide promptly to the OFT such information as it may
reasonably require for the purpose of performing any of its functions
under section 88 of the Act.
Compliance
3. Tesco shall comply with such written directions as the OFT may from
time to time give to take such steps within its competence as may be
specified or described in the directions for the purpose of carrying out or
securing compliance with these undertakings.
Subsidiaries
4. Tesco shall procure that each of its subsidiaries from time to time
complies with these undertakings as if it had given them.
Interpretation
5. The Interpretation Act 1978 shall apply to these undertakings as it does
to Acts of Parliament.
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6. References in these undertakings to any English law term for any legal
status, interest, concept or thing shall in respect of any jurisdiction other
than England and Wales be deemed to include what most nearly
approximates in that jurisdiction to the English law term.
7. In these undertakings the word ‘including’ shall mean including without
limitation or prejudice to the generality of any description, definition, term
or phrase preceding that word and the word ‘include’ and its derivatives
shall be construed accordingly.
8. For the purposes of these undertakings:
“the Act” means the Fair Trading Act 1973;
“Associated Person” means a person or persons associated with Tesco
within the meaning of section 77(4) of the Act and includes any
subsidiary of such a person or persons construed in accordance with
section 75(4K) of the Act;
“business” has the meaning given by section 137(2) of the Act;
"CC Report" means the Competition Commission's report entitled
Safeway plc and Asda Group Limited (owned by Wal-Mart Stores Inc);
Wm Morrison Supermarkets PLC; J Sainsbury plc; and Tesco plc – A
report on the mergers in contemplation (Cm 5950 2003);
“control” shall be construed in accordance with section 65 of the Act and
in the case of a body corporate, a person shall be deemed to control it if
he holds, or has an Interest in, shares of that body corporate which
amount to 10 per cent or more of its issued share capital or which carry
an entitlement to vote at meetings of that body corporate of 10 per cent
or more of the total number of votes which may be cast at such
meetings;
“Divestment Stores” means those stores set out in Appendix 5.6 Table 2
and Appendix 5.7 Table 2 of the CC Report (amounting to 53 stores in
total) that, in the view of the OFT, would be required to be divested in
the event that Morrison acquires Safeway plc, for the purpose of
remedying or preventing the adverse effects specified in the CC Report;
“Interest” means shares, an interest in shares and any other interest
carrying an entitlement to vote at shareholders’ meetings; and for this
purpose “an interest in shares” includes an entitlement by a person other
than the registered holder, to exercise any right conferred by the holding
of these shares or an entitlement to control the exercise of any such
right;
“Morrison” means Wm Morrison Supermarkets PLC and its subsidiaries
from time to time;
“OFT” means the Office of Fair Trading;
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“Safeway” means Safeway plc and any of its subsidiaries from time to
time and references to Safeway in these undertakings shall be construed
as a reference to Safeway plc and as a reference to each such subsidiary;
“Safeway Assets” includes any property, including any store, site, plot of
land or distribution depot, or any right or interest in or over or derived
from any property, including any store, site, plot of land or distribution
depot, as at the date of these undertakings which is used, or is intended
to be used, whether directly or indirectly, by Safeway as part of its
grocery retailing business in the UK;
“subsidiary”, unless otherwise stated, has the meaning given by section
736(1) of the Companies Act 1985; and
“Tesco” means Tesco plc and its subsidiaries from time to time.
FOR AND ON BEHALF OF TESCO PLC
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