Asda Group Ltd.’s £600 million ($730 million) Co-operative Group Ltd. gas station deal raises competition concerns and it needs to offer proposals to avoid an in-depth probe, the UK’s antitrust watchdog said.
(Bloomberg) — Asda Group Ltd.’s £600 million ($730 million) Co-operative Group Ltd. gas station deal raises competition concerns and it needs to offer proposals to avoid an in-depth probe, the UK’s antitrust watchdog said.
The Competition and Markets Authority said Tuesday that the deal causes antitrust concerns at 13 locations across the UK and could lead to consumers and businesses facing higher prices or lower quality services when purchasing fuel. The CMA gave the firm five days to offer proposals to fix the issues, after which the watchdog could trigger a full investigation.
The UK’s third-largest grocer struck a deal to buy 132 gas filling and grocery retail sites nationwide, three of which are development plots, in August. It said about 2,300 Co-op employees would transfer to Asda as part of the deal.
“We look forward to working constructively with the CMA over the coming days as we consider their findings,” Mohsin Issa, co-owner of Asda, said. “We remain committed to our long-term strategy to build a convenience business and bring Asda’s great value in fuel and groceries to more customers and communities throughout the UK.”
Asda has previously faced scrutiny over filling stations by the CMA, as fuel pricing has become a focus for the agency. The Issa brothers and TDR Capital agreed with the watchdog to sell some 27 stations when it took a majority stake in Asda. While Clayton Dubilier & Rice LLC offered to sell 87 gas stations to get its £7 billion purchase of WM Morrison Supermarkets Ltd over the line last year.
“Groceries and fuel account for a large part of most household budgets. As living costs continue to rise, it’s particularly important that deals that reduce competition among groceries and fuel suppliers don’t make the situation worse,” Colin Raftery, the CMA’s senior director of mergers, said.
–With assistance from Katie Linsell.
(Updates with a comment from the CMA in the final paragraph)
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