The head of an influential committee of MPs has raised concerns about regulators’ ability to protect jobs and customers during a spate of private equity takeovers of key British businesses, after Morrisons became one of the latest listed companies to receive a buyout offer.
Darren Jones, the chair of the business, energy and industrial strategy select committee, has written to the Competition and Markets Authority (CMA) to ask the watchdog to clarify its powers to intervene “when new owners act irresponsibly”.
Jones said concerns had been raised after the recent private equity-backed buyout of Asda and the approach for Morrisons. Such deals are being closely watched after the collapse of businesses including Debenhams, where debts built up under private equity ownership, and Casual Dining Group, the private equity-backed former owner of Bella Italia and Café Rouge, which fell into administration last year.
“Given previous highly leveraged purchases of high street brands, which have ultimately resulted in administration, job losses and pension fund shortfalls, there is concern that regulatory bodies have insufficient oversight or powers to intervene when new owners act irresponsibly,” Jones wrote to the CMA chief executive, Andrea Coscelli.
He asked Coscelli to advise on the powers available to deal with such problems and which further powers ought to be considered to address them.
Jones said: “British supermarkets are the latest area of interest for private equity and other buyers using significant amounts of debt. Some stakeholders have raised concerns about what this might mean for the protection of jobs, pension funds and supermarkets’ presence on British high streets.
“Whilst activity levels are currently low, I am keen to understand what regulatory oversight is in place to ensure any future transactions protect consumers and workers.”
Private equity firms have announced 113 deals for UK companies, including takeovers and minority stakes, with a combined value of £23.3bn so far in 2021, according to the data company Dealogic. That is the fastest pace of dealmaking since 2007, just before the financial crisis.
The US buyout firm Bridgepoint has taken a minority stake in Itsu, the Asian-inspired food chain, while other targets have included St Modwen Properties and the private jet company Signature Aviation.