Secret Meeting Details Confirmed: Wal-Mart Lobbied U.K. Government

Details of a secret meeting between Wal-Mart executives and top officials in the British government came to light today, giving some insight on the back room deals that have helped Wal-Mart expand internationally. Wal-Mart was having trouble breaking in to the U.K. market due to the country’s strict land use policies. Rather than change its approach to retailing, Wal-Mart instead decided to lodge a complaint with the country’s prime minister: four months after this meeting with Tony Blair, Wal-Mart acquired supermarket chain Asda and officially launched an assault on Great Britain.

It wasn’t the first or the last time Wal-Mart opposed Britain’s efforts to keep sprawl in check. This article from the New Rules Project explains that Wal-Mart’s had a hard time employing its U.S. tactics in the United Kingdom:

From the beginning, Wal-Mart has grown in the U.S. by building massive stores that dwarf all of a town’s existing businesses combined and that are spaced relatively close together across a region. This strategy has been enormously successful, enabling Wal-Mart to overwhelm local economies and drown tens of thousands of small businesses in a sea of over-development.

Wal-Mart has had more difficulty employing this tactic in the U.K., because of Planning Policy Statement 6 ("PPS6"), which requires local governments to steer retail development into town centers and to limit such development on the outskirts unless there is a clear need.

Click here to read more about Wal-Mart’s problems expanding internationally, including failed attempts, riots overseas and foreign opposition to the Arkansas retailer.

Click here for the British reaction to Wal-Mart’s entrance on the U.K. retail scene, or click here to visit Asda Watch, Wal-Mart Watch’s U.K. counterpart.

Wal-Mart did lobby Blair over Asda [Telegraph (U.K.)]

Details of a secret Downing Street meeting held between Tony Blair, the then prime minister, and a senior Wal-Mart executive just months before the world’s biggest retailer pounced on Asda have finally been released, some nine years after the £7bn deal was struck.

The Sunday Telegraph can reveal that Bob Martin, the then chief executive of Wal-Mart International, complained at the meeting to Tony Blair about Britain’s restrictive planning rules.

The minutes of the meeting, released last month by the Cabinet Office after a direct order from the information watchdog, lay bare the lobbying strategy employed by Wal-Mart before it bought Asda in July 1999.

The meeting on February 26 1999 has long been the subject of fevered speculation. The minutes, released under the Freedom of Information Act, show that Martin told Blair that “the main obstacle to entering the UK market was zoning and planning controls”. The result was that “Wal-Mart concluded they could only come into the UK by acquisition of an existing company [as they had in Germany]”.

Martin’s focus on planning is controversial because his comments appear to be at odds with the Government’s official account. Commenting on the meeting in July 1999, the prime minister’s spokesman said: “There were no concrete discussions about planning or business or anything else.”
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The minutes were quietly released last month. The three-page document exposes the frantic lobbying of a country’s leaders that top executives carry out before making a major acquisition. They show how Martin hinted strongly that a big deal in the UK was in the offing. “There had been a lot of speculation about Wal-Mart entering the UK,” he said. Martin “could not back up any of these rumours but he hoped some day to get a chance to be all over Europe - and if Wal-Mart was in Europe, then it should be in the UK”, the minutes say.

However, Martin left two of Blair’s advisers at the meeting - Owen Barder and Geoffrey Norris - in no doubt that Wal-Mart was about to buy Asda. The minutes, sent to Jonathan Powell, the PM’s right-hand man, and written by Barder, conclude: “I wouldn’t be surprised at all if Wal-Mart tries to acquire Asda; I gather Norris reached the same conclusion.”

Blair was clearly impressed by Martin. When Wal-Mart bought Asda for £6.7bn four months later, Blair went out of his way to welcome the deal and defended his meeting with Martin. He said: “I make no apologies for it whatever. We pay too much not just for our basic goods, but across a range of services.”

Posted by Alex Goldschmidt on Monday, January 28, 2008