Broadmarsh: The Never-Ending Story

We all thought the acquisition of Broadmarsh by the owners of the Victoria Centre was all over…well, it ain’t now.
Yes, Capital Shopping Centres secured agreement to buy the centre off former owners Westfield and the Post office Pension Fund.
But here we are a couple of months on and the Office of Fair Trading has decided to train its microscope on the deal.
I understand it was the OFT’s own decision to do so, a result of its routine monitoring of all large-scale merger and acquisition activity in the UK. It was not responding to a complaint.
There are four possible outcomes – it decides the deal doesn’t qualify for a detailed investigation under the terms of the Enterprise Act; it can conclude the deal raises no competition issues; it can decide it DOES raise competition issues and refer it to the Competition Commission; or it can ask CSC if there is anything it can do/sell to remove any potential competition issues.
The OFT has launched this initial investigation because it thinks it is worth investigating whether one developer owning both major shopping centres in the same city reduces competition for shoppers/retailers.
Where does this leave the Broadmarsh/Victoria Centre redevelopments? Well, treading water perhaps momentarily.
This initial OFT investigation takes roughly 40 days, though any comments about it from interested parties have got to be with them by 24 January.
Who are the interested parties? The ones the OFT will listen to most are shoppers and retailers because it is their ability to enjoy competition and choice that it believes could potentially be lessened by Broadmarsh and the Victoria Centre being owned by the same company.
To cut to the chase, the big issues are whether shoppers will have enough choice if the same landlord owns two destinations, or whether CSC would be able to dictate rental levels and who goes where to retailers because it calls the shots.
Will the investigation lead to anything? Doubtful – with shop chains struggling again the lack of choice comes from a weak economy and the web not market domination. Similarly, there are two sides to the rental landscape: yes, they’ll all have to deal with one landlord now, but don’t assume they would have been less than ruthless themselves if the opportunity to play one developer off against another were still around.
In any case, regulatory interference in development in a depressed retail market would go down like a lead balloon.
The OFT may simply be doing its duty here and making sure people know it didn’t ignore the domination of a city by a single developer.
I’ll conclude this latest instalment of the Broadmarsh Saga with the comment on the OFT probe from Nottingham City Council, which clearly wishes someone, somewhere would just stick a spade in the ground: “It is unfortunate that this referral has been made because although we don't expect it to be successful, it will undoubtedly add delay to our talks over the future development of the south end of the city. We had started constructive discussions with Capital Shopping Centres over their future plans for the Broadmarsh shopping centre and we will continue to negotiate with them irrespective of this development."
So may be this is just a final hiccup. But don’t hold your breath...