The Competition and Markets Authority (CMA) has announced that it has agreed to accept Asda’s offer to sell off 13 Co-op forecourt sites, but a new investigation into Asda’s acquisition of most of EG Group’s forecourts this week seems unlikely.
The offer to sell the 13 sites was made by Asda after the CMA concluded its £600m takeover of the Co-op’s forecourt business could lead to a reduction in competition in 13 local areas, and warned this could lead to an in-depth investigation into the deal.
In January the CMA opened a preliminary investigation into the completed acquisition by Asda of Arthur Foodstores Limited, a company set up by the Co-op to sell its 132 petrol forecourt sites and attached grocery stores.
The CMA’s investigation identified a number of local areas in which Asda and the Co-op sites that it acquired compete to provide fuel or groceries to customers. The CMA found that the deal raises competition concerns in 13 locations across the UK. In each of them the merging businesses currently compete for customers and the CMA said they would not face sufficient competition after the merger.
It concluded this could lead to consumers and businesses in these areas facing higher prices or lower quality services when shopping or buying fuel.
Asda was given the opportunity to make proposals to the CMA to address the competition concerns identified, or face an in-depth (phase 2) investigation, and made the offer to divest the Co-op sites in the 13 localities.
The CMA said it was prepared to accept the offer in lieu of a reference of the deal for a phase 2 investigation, but then had to put that decision out for consultation which has now concluded.
The CMA revealed that one of the 13 locations, in Earlston, Scotland, raised competition concerns in relation to the supply of both petrol and groceries. Ten other petrol stations that raised concerns are in Barnard Castle; Caledonian Road, in London; Cirencester; Gnosall (Station Road) in Staffordshire; Lauder, in Scotland; Minsterley, in Shrewsbury; Oakdale (Ripon Road), Harrogate; Rochester; Stonehaven (Kirkton Road), in Scotland; and Weycock Cross in Barry. The two further areas that raised concerns in relation to groceries are the Co-op mid-size stores in St Columb Minor (Henver Road), in Cornwall; and East Peckham.
Following Asda’s purchase of most of EG Group’s UK forecourts this week there have been calls for the CMA to look into this deal too, but this is thought to be unlikely because it already considers the two businesses as one because of their shared ownership. The pair also share the same chair in former M&S boss Lord Rose.
The deal in 2020 by Mohsin and Zuber Issa and TDR to acquire Asda was investigated by the CMA and EG Group was required to sell off 27 sites to allay concerns that competition could be affected in the forecourt sector in local markets.
