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10/22/2013

Sobeys to sell 23 stores in Safeway deal, says Competition Bureau

Sobeys purchase of Safeway Canada gets go-ahead.

Sobeys says it will put 23 stores up for sale in exchange for regulatory approval for its $5.8-billion purchase of grocer Safeway Canada.

The Nova Scotia-based supermarket chain says the Competition Bureau approved the transaction with the understanding that certain locations in Western Canada would be put on the market.

Sobeys, which is owned by Empire Co. Ltd., says the stores are under various labels, including Safeway, Sobeys, IGA and Price Chopper.

Eleven of the 23 stores are located in Alberta. Sobeys had earlier said it would become the grocery market leader in the province thanks to its purchase of Safeway.

Another five stores the company must sell are located in Winnipeg with the balance in Saskatchewan and B.C. (See full list below)

“Our focus now turns to closing the deal, which we expect to do in early November, and beginning to serve our customers in Western Canada as one company," Marc Poulin, president & CEO of Sobeys, said in a statement.

Sobeys announced in June that it was going to purchase the Canadian assets of California-based Safeway. Those included 213 Safeway stores in Western Canada, 10 liquor stores, several distribution centres and the wholesale supply business Macdonalds Consolidated.

The retailer will still come away with a gain of 190 supermarket locations overall from the Safeway acquisition.

In its report, the Competition Bureau noted that "a significant number of Safeway's 213 grocery stores are in relatively close proximity to at least one Sobeys’ grocery store" but that in many of these markets there were enough other national, regional and local competitors in place to give consumers choice and encourage competition."

However, the Competition Bureau concluded that "the proposed transaction would lead to a substantial lessening or prevention of competition in the retail sale of a full-line of grocery products in a number of local markets in Western Canada."

Sobeys' sale of the 23 stores would "resolve these concerns," it wrote.

The Competition Bureau also said it examined the Sobeys-Safeway deal’s effects on grocery wholesale, notably to independent retailers.

It looked at whether a combined Sobeys-Safeway would be powerful enough to either reduce supply to, or raise wholesale prices to, “certain independent retailers that currently compete with either of the parties’ retail stores in certain local markets.”

It concluded that other wholesale competitors in Western Canada would provide independents with other buying options and that many of these other wholesalers are in a good position to expand their businesses.

“Therefore, effective remaining competitors will act as a constraint to an exercise of market power arising from the proposed transaction,” the Bureau wrote.

Here is a complete list of the stores that Sobeys has agreed to sell, according to the Competition Bureau:

British Columbia:

Sidney, B.C., Safeway Sidney, 2345 Beacon Avenue

Tsawwassen, B.C., Safeway Tsawwassen, 1143 — 56th Street

Victoria, B.C., Safeway University Heights, 3958 Shelbourne Street

Victoria, B.C., Safeway Fort and Foul, 1950 Foul Bay Road

New Westminster, B.C., Thrifty Foods Sapperton, 270 East Columbia Street

Alberta:

Edmonton, Safeway Millwoods, 2331– 66th Street

Edmonton, Sobeys Hawkstone, 18370 Lessard Road

Edmonton, Sobeys Goldbar, 5036 — 106th Avenue

Edmonton,  IGA Ottewell, 6204 — 90th Avenue NW

Canmore, Alta., Sobeys Canmore, 950 Railway Avenue

Cochrane, Alta. Sobeys Cochrane, 65 Bow Street

Leduc, Alta., Sobeys Leduc, 5421 — 50th Street

Fort McMurray, Alta., Safeway Thickwood, 131 Signal Road

Fort Saskatchewan, Alta., Sobeys Station Square, 10004 — 99th Avenue

Taber, Alta., Safeway Taber, 4926 — 46th Avenue

Wetaskiwin, Alta., Sobeys Wetaskiwin, 4703 — 50th Street

Saskatchewan:

Regina, Sask., Safeway Regina, 3801 Albert Street

Saskatoon, Sask., Safeway 8th/Circle, 3310 — 8th Street East

Manitoba:

Winnipeg, Safeway Main Street, 1441 Main Street

Winnipeg,  Safeway Southdale Centre, 77 Vermillion Road

Winnipeg,  Safeway Grant Park, 1120 Grant Avenue

Winnipeg,  Safeway St. Vital, 850 Dakota Street

Winnipeg, Price Chopper Stafford Square, 677 Stafford Street

Correction: An earlier headline of this story said that Sobeys would sell 23 Safeway stores. In fact, the 23 stores to be sold cover other Sobeys banners as well in Western Canada.