PROPOSED ACQUISITIONS QUESTIONED BY GROUP

BRIAN DUNN

MONTREAL (FNS) -- The federal Competition Bureau's inquiry into one of two recent proposed supermarket acquisitions is tainted by potential bias, an Ottawa-based public interest group maintains.

Fearing a raw deal for consumers and suppliers, the Consumers Association of Canada filed a submission with the Competition Bureau in early January opposing the acquisition by Loblaw Cos., Toronto, of Provigo Inc. here. The association is also opposing the proposed purchase of Oshawa Group, Toronto, by Sobeys Canada Inc., Stellarton, Nova Scotia.

Lawyers from McGill University's Center for the Study of Regulated Industries here have complained because Loblaw's lawyer, Robert Russell, represented the Competition Bureau itself in another merger case, which ended less than a year ago.

A lawyer from the center said either Russell should resign from the case or the Competition Bureau should refer the case to an independent review council.

However, a spokesman from the Competition Bureau said its legal department had reviewed Russell's status and concluded there was no conflict of interest.

The companies involved in the Competition Bureau's inquiry are four of the six largest supermarket chains in Canada, with a combined market share of close to 75%. Loblaw would pay about $1.13 billion ($1.74 billion Canadian) for Provigo, while Sobeys would acquire Oshawa Group for close to $975 million.

If approved, the mergers would allow the chains to increase prices and offer fewer choices for consumers since some brands would be eliminated, the association maintained. Officials from Loblaw and Sobeys did not return phone calls.