Blackfriar: A war of words and prices – it's that time of year again

As sure as night follows day, January always heralds a new round of supermarket price wars.

Prices are "slashed", competition becomes "cut-throat", retailers "put their money where their mouth is" and they all claim to be much cheaper than their rivals.

It's a bit like Prime Minister's Questions except the retailers only indulge in playground tactics during January as opposed to the whole of the year.

Leeds-based Asda has really put the cat among the pigeons with claims that its products are 10 per cent cheaper than its major rivals.

Predictably the rivals have reacted with outrage.

Yesterday, Sainsbury's (which has leapfrogged Asda to regain its number two position behind Tesco) claimed that only one in 600 Asda customers have bothered to use the new price checker.

"Asda are not 10 per cent cheaper," asserted Sainsbury's chief executive Justin King. "To my outrage the Asda initiative does not include bananas! We charge a lot less for Fair trade bananas."

Asda hit back saying that out of 18 million customers, more than one million have used the price comparison website.

"Since the start of the year we have seen a seven fold increase in shoppers checking their bills," retaliated an Asda spokesman.

When told that Sainsbury's had said there is no way Asda's prices are 10 per cent cheaper, he revamped that famous Mandy Rice-Davies quote: "Well they would, wouldn't they?"

Tesco has also dismissed Asda's claim to be 10 per cent cheaper as "utter rubbish", saying that Asda's price comparison excludes everyday staples such as bananas and mince.

Morrisons' commercial director Richard Hodgson also waded in, saying that Asda's new price war was simply "gimmicks and stunts".

The price checker promises to undercut its rivals by at least 10 per cent. If it fails to do this customers will be entitled to receive an Asda voucher making up the 10 per cent shortfall.

Blackfriar has studied the details of the Asda promise, but having failed his degree in nuclear science he is still a little confused.

Apparently shoppers will be refunded 10 if they can find their 100 basket for the same price anywhere else. Customers who find their 100 Asda basket for 95 elsewhere will receive 10 per cent of 95 plus the original 5 difference – a total of 14.50.

Ah! It all makes sense now...

But of course Asda is not alone with its aggressive stance to ensure rock-bottom prices. (Blackfriar is wondering whether his talents are wasted in a weekly comment column. Maybe a new job in retail marketing beckons?)

Tesco is investing 340m in reduced prices, with deals it claims will save the average shopper 27.84 on a basket of everyday products.

Meanwhile Asda's Yorkshire rival Bradford-based Morrisons has come up with its biggest ever "Price Crunch", cutting the price of over 5,000 items, offering 210m in savings to customers during January.

Morrisons has promised to cancel out the effects of the rise in VAT sales tax to 20 per cent by reducing the price of an average basket of groceries by 39.27 a week.

For the shopper it all becomes a little tiring. But rest assured, it will all be forgotten by February.

The silence from healthcare group Smith & Nephew on its apparent rejection of Johnson & Johnson's approach leaves Blackfriar with a bitter taste in his mouth.

Reports over the weekend claimed the group, which has its wound care arm based in Hull, rejected a 7bn offer from J&J without bothering to tell shareholders.

J&J's offer was rejected for being inadequate, according to reports.

S&N has remained tight-lipped in the face of increasing pressure to explain the detail behind the spurned approach.

The movement in S&N's share price, which at one point was up 13 per cent, surely requires some investigation by the Takeover Panel. S&N will argue the approach had no impact on its price at the time as it remained secret.

Clearly companies talk about mergers and acquisitions all the time, and few of these ever come to light. To suggest that every tentative approach or informal merger conversation must be made public is a step too far – chief executives would never get anything done.

But the revelation of the approach, and the possibility that J&J or others may return with higher bids, means shareholders must be properly briefed on what is happening at S&N.