Blow for £590m Littlewoods deal

TRADE & Industry Secretary Patricia Hewitt caught the retail sector on the hop today as she called in the Competition Commission to investigate GUS's £590m mail order sale to rival catalogues firm, Littlewoods.

Shares in GUS, which owns Argos and Homebase, tumbled 17 1/2p to 678 3/4p on the surprise decision.

But the problem appears to have landed firmly in the lap of Littlewoods and its owners, the secretive Barclay brothers, David and Frederick. A spokesman for GUS stressed that the deal was 'unconditional in all respects'. He added: 'We have sold the business.'

Hewitt, who is scheduled to rule on Friday on the Safeway bid tangle, said she had been advised by the Office of Fair Trading that 'there is a significant prospect of a substantial lessening of competition in mail order and the related activity of business to consumer parcel delivery'.

Littlewoods' post-merger market share would be three times that of its next largest competitor, she said.

The deal brought together Littlewoods £1.3bn of annual sales with the £1.7bn turnover of GUS's catalogues arm. It would have added the Kays, Great Universal and Choices names to the Littlewoods stable and giving it a market share of 30%.

The combined workforce totalled 30,000 but the deal was expected to result in significant job losses, particularly in the North-West. The Competition Commission has been given until 23 December to complete its investigation and report back.