Supermarket warfare going strong

EVERY company has its particular rival, the firm whose success is most galling and against whom the competitive drive is most acute.

In Sainsbury's case, that rival is Tesco. The battle for market leadership has gone on for decades, largely won by Sainsbury's in the Eighties and by Tesco ever since. Figures this week from both supermarkets show the war is as keenly fought as ever.

Today Sainsbury's chief executive Sir Peter Davis alluded to market research which proved his company had done better than Tesco in certain complex ways. He also pointed out that his US business Shaw's makes more money than all of Tesco's overseas operations. Two days ago, Tesco said it was enjoying stronger sales growth than Sainsbury's.

To those uninitiated in the finer arts of supermarket warfare, basic figures show Tesco increased sales at a faster pace than Sainsbury's in the first few months of this year. Its international division has also far more long-term money-making potential than Shaw's.

But Sir Peter's is still no mean achievement. Underlying sales growth has more than doubled in his first full year and momentum has been sustained. He has an almost Herculean challenge ahead of him if he is to beat Tesco. For Sainsbury's customers, employees and shareholders, however, Sainsbury's in spring 2002 is a far better place than it was before he arrived.

SEC over here

BONDS have long been regarded as the poor relation of equities, and investors have been treated like the lumpen proletariat, bovine recipients of whatever debt companies want to push their way. But times are changing.

Companies that loaded themselves up with debt in the good times are now sinking beneath it. Bond issues, which seemed a trouble-free way to raise money a couple of years ago, are creating problems as corporates find themselves burdened by huge interest and capital payments. One by one, these concerns are being forced to persuade bondholders to convert their loans into equity. The trend puts bond investors in their strongest bargaining position for years, and underlines the importance of bond issuance in the financial markets.

There is a broader point. Banks are beginning to suggest they will be less willing to lend money to companies than they have been. Businesses in need of finance will therefore find themselves even more reliant on the bond markets.

Following the raft of high-profile corporate failures, canny bond investors are likely to intensify their demands for knowledge of companies' assets and liabilities before stumping up cash.

The Financial Services Authority should address this issue as a matter of priority. In the US, any organisation that borrows money from the financial markets is obliged to make annual filings to the Securities and Exchange Commission providing exhaustive details to all those who might be interested.

This level of transparency should be imported here. The time has come for a European version of the SEC.

Ill-defined

CHANCELLOR Gordon Brown has let the electorate know that the NHS will receive an extra £18bn over the next three years.

The Financial Times says this will be partly funded by an increase in taxes but mainly by higher national insurance contributions. There may be a definitional difference between taxes and national insurance but the line between them is wafer-thin. For most of us, they boil down to the same thing - a large slug of money taken from our pay packets.