Statement re Safeway Hearing

Tesco PLC
30 April 2003

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                  consumers would win in a tesco/safeway deal

         Terry Leahy puts Tesco Case to Competition Commission Hearing



Tesco Chief Executive, Sir Terry Leahy, today welcomed the Open Hearing on the
Safeway inquiry. He told the Competition Commission that a Tesco acquisition of
Safeway would offer the best outcome for consumers and communities and would
lead to a net creation of 5,000 new jobs.


He said 'The key question is whether an acquisition of Safeway would lead to a
significant lessening of competition, to the detriment of consumers - for
example, through higher prices.


This competition question will be decided by the Commission but what I can tell
you is that the proposed acquisition would enable all customers to benefit from
our offer in many more stores of all sizes without weakening the intense
competitiveness that characterises our business. We compete nationally and would
continue to do so.


It would be perverse to deny a wider group of consumers the chance to have
access to what Tesco has to offer for customers. It would send a signal that
successful firms in a competitive market face a regulatory hurdle not shared by
their rivals. This could chill the very competitive endeavour that competition
policy exists to preserve and to encourage.


Indeed, Tesco is totally committed to maintaining competition and rivalry in the
sector. This environment has allowed significant movements in market share over
time. It is by working in a competitive environment, which spurs innovations
like Clubcard and home shopping, that we have become market leader.


Size alone is no protection in this market. Indeed, the fastest growing major
player in the market is Morrisons.


Rivalry also ensures that buying efficiencies are passed onto the consumer
through price and quality. Our business has more than doubled in size over the
past ten years. Yet, our margin was higher ten years ago than it is today.'


He also said: 'The price of food has declined by 12% in real terms since 1989.
Within this, since 1999, our food prices have fallen by 4.5% in real terms,
against an industry average of 2.6%. And we have further cut prices by £60
million only this week. And this ignores the impact of Clubcard, which
represents a 1% discount off the shopping trip for card holders.


A Safeway customer whose store is converted to Tesco would see prices fall by
some 11% across a broad range of products. Consumers know that price cutting is
a long term Tesco strategy, not a new tactic. Lower prices make food more
accessible, particularly for the less affluent. We pride ourselves on serving
consumers from all walks of life. In all our supermarkets we offer products at
each end of the spectrum-from Value through an extensive range of branded and
own label products through to Finest. We are organised to deliver value for
money for all customers, not just some. No neighbourhood is a no-go area for
Tesco or for serving customers.


A customer of a Safeway store that converted to Tesco could be more confident
that we would make a success of it than would our competitors. Indeed, in
respect of smaller stores, some of them simply don't have our track record of
running them effectively. And 25% of Safeway stores are less than 15,000 sq
feet.


Communities would see more good local jobs for local people. We have a strong
record of applying management skill and innovation when integrating businesses
into our own. We've done it before and would manage the change well. Customers
would also see tangible benefits for the environment and for sustainability.


He concluded 'Our success has been driven by our focus on customers in a
competitive and dynamic market. The current proposals affecting the future of
Safeway raise serious issues as to whether a structural change, which could see
the four major retailers become three, is in the consumer interest. If such a
restructuring of the market were to be permitted, I strongly believe that Tesco
would be best placed to lead this change.


Uniquely, Tesco would deliver substantial consumer benefits, universal appeal to
all types of customer, experience across a wide range of store types and world
class managerial team - to the benefit of customers, communities, staff and
suppliers.'




Enquiries:

Tesco

Lucy Neville-Rolfe ([phone])

Steven N. Butler ([phone])

The Maitland Consultancy (PR Advisor to Tesco)

Angus Maitland ([phone])

Philip Gawith ([phone])


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