Philip Hammond, we’re told, is so unhappy with Britain’s modern version of capitalism that he is working up a major speech on improving it. He has no shortage of targets, from runaway boardroom pay and the gig economy, to extracting significant tax revenue from the internet giants.

Above all is the growth and influence of large corporations, seen by many as “malignant rather than benign” as James Odgers, a farmer, wrote to the FT last week. Nowhere is this power more apparent than in the decision by Walmart to sell Asda to j Sainsbury.

Skilfully presented as some magic formula for cheaper food, the proposal would create a company with over 30 per cent of the UK grocery market. Yet it was not the prospect of millions of happy shoppers that caused the Sainsbury price to leap by 15 per cent when news of the deal broke last month, but the prospect of oligopolies behaving the way they always do.

We now know how Tesco behaved when it considered itself so powerful that no supplier dared argue. Alongside Tesco, Sainsbury/Asda would mean two companies controlling almost two-thirds of Britain’s food sales. Small suppliers would face an intensified squeeze. No amount of store sale “remedies” would make a significant impact on this dominance.

Above all, this is another test of whether the UK authorities are serious about competition. It took a brave stand from the EU’s competition commissioner, Margrethe Vestager, to prevent the takeover of O2 by Three. The UK’s Competition and Markets Authority recently waived through Tesco’s takeover of Booker, presumably because wholesale food is nothing like what you get in the supermarket.

The CMA now has a chairman in Andrew Tyrie who can face the consequences of being awkward, one of which was to deny him high office in the government. He now has the chance strike a blow for competition, and stop this anti-competitive stitch-up in its tracks.

Very few signs of life

Standard Life Aberdeen has been transformed, chairman Gerry Grimstone told shareholders this week, into a “capital light investment company.” All that fuddy-duddy 200-year-old life assurance stuff has gone, with the final disposal to Phoenix for £3.2bn, a deal which he described as “excellent value”. The new company is so capital light that half the proceeds are not needed.

The shareholders do not seem impressed. Despite the prospect of getting £1.75bn back, the shares sagged. They are cheaper now than before the ‘orrible merger that created Staberdeen in March last year. The yield is over 6 per cent, and if there are any benefits, they look a long way away, rather like the hundreds of jobs which are lost in Scotland as a result.

The double act at the top, with an unmatching pair of CEOs, has lasted longer than many observers expected, but still looks like unstable equilibrium. Sir Gerry is off next year, by which time the troops may want results. His successor will doubtless note that there is no such thing as a successful merger.

As for Phoenix, this “transformational” (dread word) purchase will be paid for with a £950m rights issue and the £500m of Fixed Rate Reset Perpetual Restricted Tier 1 Write Down Notes (you knew) it has already raised. The banking vultures are skimming a mere £13m from the rights issue. It is not known how many shareholders will be merely recycling their Standard capital handout into Phoenix. It’s how the City works, after all.

Not perpetually enhanced

When the board of Invesco Perpetual Enhanced Income demanded a cut in fees, Invesco managers refused and gave notice, as they are entitled to do. Now instead they are biting back. With their allies, they want to remove two directors and (presumably) keep the mandate for this £153m trust. Given the wide dispersion of shareholdings through platforms and nominees, their 23 per cent might well win the vote.

This looks like blatant self-interest. The fees, for managing a bond portfolio, are high even before a complex performance kicker. The interests of the outside majority are being sacrificed for the managers. Unless Investec backs off, or produces a convincing explanation, its actions will do long-term damage to itself and the industry.

This is my FT column from  last Saturday

 

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