Life is unfair, moan Tesco's rivals. Their complaints too often seem designed to divert attention from their own poor performance, but in one respect they have a point.
If, on the most widely quoted market share measure, Asda and J. Sainsbury wanted to merge, the transaction would be investigated by the Office of Fair Trading and might be referred to the Competition Commission. But Tesco, with 30 per cent of the market, can expand organically seemingly without the competition authorities ever challenging it.
There are problems with the 30 per cent figure and a fairer comparison gives Tesco 21 per cent of its market. But, data aside, Citigroup estimates Tesco could double its UK presence in the next decade, simply by extending existing stores. Space is the biggest driver of market share and planned expansion could certainly take Tesco beyond the 25 per cent that would trigger a competition investigation in a merger or acquisition.
The OFT argues that what matters is not market share but market abuse, and that anyone could bring a complaint against Tesco if there were evidence of, say, predatory pricing. But it is on shakier ground when it defends the distinction it makes between organic growth and M&A. Five years ago, the Competition Commission recommended that the OFT should have to approve the acquisition or development of large stores by the big grocers. This has not happened. But the bigger Tesco gets, the larger the threat of new regulation will loom.