A consultation on an offer by Asda to sell off 13 Co-op forecourt sites has been launched by the Competition and Markets Authority (CMA).
The offer 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 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 five working days to offer legally binding 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 has now announced that it proposes to accept the offer in lieu of a reference of the deal for a phase 2 investigation.
It added: “Before reaching a decision as to whether to accept the proposed undertakings, the CMA invites interested parties to make their views known to it. The CMA will have regard to any representations made in response to this consultation and may make modifications to the proposed undertakings as a result. If the CMA considers that any representation necessitates any material change to the proposed undertakings, the CMA will give notice of the proposed modifications and publish a further consultation.”
The deadline for responses to the consultation is May 3 and they should be sent to Lily.Xiao@cma.gov.uk
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.