BA bought the franchisee airline, which operates out of Gatwick, from institutional investors led by venture capital company 3i Group."We can only assume that BA has some kind of secret, anti-competitive pre-emption right in their franchise agreement with CityFlyer, and that we were being used as a stalking-horse," said Mr Branson.Bob Ayling, BA chief executive, said the purchase was "good news for customers, employees and for Gatwick".Mr Branson yesterday announced plans to recruit 1,500 staff at Virgin Atlantic and its sister companies between now and spring 2000.. "We anticipate from year three onwards we will achieve approximately $40m of synergies from central services, purchasing, the optimisation of distribution systems and own- brand development.". RICHARD BRANSON, the billionaire owner of Virgin Atlantic, is heading for a fresh dogfight with British Airways, his arch-rival. Mr Branson will today lodge a complaint to the competition authorities over the sale of CityFlyer Express to BA. He said the deal would give BA even more dominance at Gatwick, London's second major international airport, as well as controlling the majority of slots at London's biggest hub, Heathrow. Mr Branson said his airline was approached about buying CityFlyer in the spring and was interested in doing a deal but failed to open talks despite numerous attempts. Mr Branson said he believed BA had an "anti- competitive, pre-emptive right" to CityFlyer which cut out rival offers.He plans to complain to John Bridgeman, the director general of Fair Trading, at a meeting today. "I will ask him to act decisively," said Mr Branson.Mr Branson said in a statement that HSBC, the banking group, approached Virgin in the spring to ask if it wanted to buy CityFlyer.

"We said we would like to buy it but HSBC never came back to us with a price despite a number of calls."BA yesterday announced it had agreed to buy CityFlyer, which is one of its franchise operators, for pounds 75m. However, the underlying business made profits of $47.3m on a turnover of $1bn last year.Sainsbury's is paying $490m, of which $269m is in the form of Star's existing debt and the remainder cash to be met from the firm's existing resources. Mr Adriano said the move was "wholly in line" with the company's North American strategy. Sainsbury's shares fell 8p to 520p on the news.Analysts said that since Investcorp bought Star Markets four years ago for $285m, it had modernised the stores, putting in new equipment and investing in building up the brand. Star was loss-making in the year to the end of January as a result of having to meet $50m a year of financing costs. Sainsbury's has also been impressed at the way European rivals have forged ahead abroad, particularly Ahold, the Dutch chain, whose success at integrating a string of large US retail acquisitions has proved to investors that overseas expansion can work in the retail sector.

With this deal the group will have $3bn-$4bn of sales, putting it more than third of the way towards that goal. North America has been the graveyard of the global ambitions of several big UK retailers, including Laura Ashley, Body Shop, Tie Rack and Sock Shop.However, with food retailers coming under increasing scrutiny from the competition authorities, opportunities to expand the business in the UK are dwindling. Dino Adriano, chief executive, said Star Markets was "an excellent fit" with Shaw's, Sainsbury's existing New England supermarket chain and would enable the group to achieve bigger buying leverage with suppliers. THE SAINSBURY'S store chain yesterday expanded its operations in the United States, paying pounds 294m for Star Markets, New England's fifth- largest retailer. The aim of leaking the talks was probably to make Exxon overpay. But it could just as easily kill the deal, in which case Royal Dutch Shell does not have to press the panic button just yet.. In order to be made palatable, it would require massive divestments in the US and Europe, where Exxon would be joined at the hip with BP-Amoco by virtue of its partnership with Mobil.Added to this Exxon-Mobil also offers less scope for cost savings and value enhancements than BP-Amoco and would leave the partners with a massive goodwill write-off.

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