This could be a 'top-up shop' too far

As deals go, Tesco's acquisition of 30 filling stations and forecourt stores is the equivalent of a pimple on an elephantine corporate derrière.

But the reactions of the Office of Fair Trading, which must clear the deal, will be awaited with bated breath throughout the entire retail sector. Tesco's growth, doubling its profits to £2bn in less than five years, has been awe-inspiring, and while other retailers are suffering there is no sign of a spanner in the works of Terry Leahy's machine.

That growth has pushed Tesco's share of the UK grocery market over 30%. In some regions, its dominance is far greater. In the north-east, for example, Tesco now has an eye-watering 39% of the local market.

Terry Leahy prefers to point out that Tesco has an unworrying 13% of the entire retail market and a measly 6% of the convenience store sector - into which this new deal fits. So far the OFT has made a clear distinction between weekly "one-stop" shopping and convenience store "top-up" shopping. And there has been no recent indication that the watchdog's thinking has changed.

But there is broad agreement that Tesco got lucky when its purchase of T&S, and then Adminstor, were waved through. Terry Leahy is now rolling the dice for a third time, at a time when Tesco is far more dominant and in a far more questioning environment. His luck might just run out.

French stick

The French government's industrial policy is in disarray. One day president Jacques Chirac is setting out, in concrete terms for once, his plans for an industrial innovation agency to promote growth and competitiveness for French and European companies in tomorrow's global sectors.

The next moment, his government is leaking to Les Echos, the financial daily, a list of 10 sectors it considers strategic - that is, those it is determined to keep out of foreign hands in a fresh display of the "economic patriotism" demanded before the summer holidays by premier Dominique de Villepin.

Just to point up the contradictions, the country's oldest industrial group, St Gobain, formally delivers its hostile bid for Britain's BPB, an innovative and growing plasterboard-maker. St Gobain has grown dramatically since it built the Hall of Mirrors for Louis XIV in Versailles, not least through overseas expansion and acquisitions, and so have state-owned EDF, France Télécom, Lafarge and others. Its investors are, like those of BPB, multinational and driven by value-creation, not displaced notions of la patrie

The Chirac/de Villepin list simply highlights the policy's folly. It was drawn up partly in response to the (manufactured) political furore over PepsiCo's putative but imaginary bid for Danone, the yogurt maker. But yogurt doesn't figure on the list. Nor do oil, telecoms, aerospace, the media, or engineering groups - such as Alstom, which the government rescued to keep it out of the hands of Germany's Siemens.

Casinos do feature, apparently on the grounds that they could fall into mafioso hands. So do biotechnology and, curiously, antidotes - to prevent them being used by terrorists, it seems. At least these bizarre choices are complemented by others traditionally deemed strategic - arms, security, dual-use technologies, intercept materials and encryption.

No wonder Thierry Breton, finance minister and ex-France Télécom boss, was cautious when questioned about it. His former colleagues in French boardrooms can see no room for such protectionist measures, which will backfire by penalising shareholders, discouraging innovation and growth and bringing down the antitrust muscle of the European commission. Nor can we.

Shop horror

The weather; terrorist attacks; a slowing housing market - even the most gripping Ashes series in history keeping us glued to the telly. All have conspired to keep consumers out of the shops. No question, 2005 will not go down as a vintage year for retailers unless something wholly unexpected happens.

The latest figures for consumer confidence, released yesterday by GfK Martin Hamblin, suggest that is highly unlikely. Consumers are less optimistic both about the state of the economy and whether it is time to splash out. Clearly, the report from the CBI earlier this week detailing the tough time retailers are having was no aberration.

Those expecting the quarter-point cut in base rates from the Bank of England last month to materially change things will be disappointed. It takes time for monetary policy to achieve any traction on the economy, particularly when the easing is limited to one small move and the headwinds are strong.

Two themes leap out. The first is that oil prices are eating into spending power at a time when consumers have lost the appetite for borrowing. Rather than buy on tick, they have tightened their belts. The second is that all the evidence from previous terrorist outrages indicates that the full impact only comes through over weeks and months. July's twin attacks on London will affect sentiment for some time, by which time pressure will have built up for a stronger response from the Bank.