Are we about to see a rise in food prices?

Sainsbury’s shares lost a bit of ground after hitting a seven-year high on the back of takeover speculation that has (so far) worked out wonderfully well for speculators.

Of course, the higher the shares go, the more a bidder would have to pay, the less attractive the target would become, even to a predator with pockets as deep as those of Apollo. The private equity firm that lost out in the battle for Asda is the rumoured predator, you see.

A Gamestop style surge could yet kill any hopes it might have. So perhaps Sainsbury’s shoppers should put some of its equity in their baskets. The ownership of these companies matters to them. Ditto the group’s workers, although the current labour shortages ought to keep bosses honest when it comes to pay packets.

Let’s say an Apollo were to put up and confirm the rumours. Assuming one of Morrison’s suitors gets it to the altar – a good bet given the City’s big fund managers would fold an unbeatable hand in the face of a packet of Toffo sweets and a crumpled tenner – a successful bid for Sainsbury’s would see three of the big four British supermarkets either partly or fully under the control of private equity firms.

Decisions about their future would be made based on spreadsheets in New York rather than in Holborn (Sainsbury’s) or Bradford (Morrisons).

The value in increasing workers wages to a tenner an hour – as Morrisons has done – is much less obvious to the denizens of Wall Street than it is to people here. They don’t face the same sorts of pressure.

Ditto the need to keep up with the neighbours on price as aggressively as possible and to achieve high marks in the surveys run by people like Which?

We’ve become accustomed to a highly competitive grocery sector and that has been a thoroughly good thing. But remember this: prior to the emergence of Aldi and Lidl it was still supposed to be that and yet margins were nearly twice what they are today. They are still higher than in parts of Europe.

Were three of the sector’s big four players to be saddled with heavy loads of debt in need of servicing by private equity owners, the motivation to step off the competitive gas would be clear. It would be a lot easier to do that with the biggest rivals in the same boat.

There would still, of course, be Tesco. But there’s no guarantee that Tesco would feel the need to keep the others honest if there was the potential for it to increase its margins. And some have even taken to speculating about its future.

Aldi and Lidl will always be around but price matching to parts of their limited ranges could deal with that issue.

The government has inched its way to a more interventionist stance on the subject of takeovers in response to the concerns over private equity gobbling up huge chunks of corporate Britain. Nvidia’s bid for chip designer ARM Holdings has already been called in and is under the scrutiny of the Competition and Markets Authority. Ditto the private equity funded tilt at Ultra Electronics, which is being done via Cobham. An American bid for Meggitt may find itself in the same boat.

All this is before new powers to intervene on “national security” grounds are on the books.

Those powers were drawn up after rising concerns about the UK losing control of sensitive technologies as the defence sector is hollowed out.

The concerns are well founded and a more cautious approach is welcome, not least given the way Cobham has been gutted, with half the business sold even after the assurances that were offered at the time of its takeover, assurances that now look extremely woolly.

Ultimately, however, the fate of Asda, Morrisons, and Sainsbury’s, is of far more importance to the average Briton, especially if the end result of the current tumult is higher food prices and a less feisty sector. And that may well be the net result.

So best cheer those Sainsbury’s shares higher if it keeps the chain where it is and helps to keep the sector honest.