Morrisons’ £190m takeover of McColl’s looks close to being given official clearance after the Competition & Markets Authority (CMA) announced today that it is likely to accept an offer from the supermarket group to sell 28 McColl’s stores to address competition concerns.
Following a Phase 1 investigation, the CMA ruled last month that the deal would not harm the vast majority of shoppers or other businesses. However, it raised competition concerns about stores in 35 areas.
Morrisons has now offered to divest 28 McColl’s stores to a purchaser or purchasers to be approved by CMA. This includes 26 stores in England (in areas such as Swindon, Lincoln and Brentwood), 1 store in Scotland (Perth) and 1 store in Wales (Newport).
The CMA stated today that it is minded to accept these proposals, which would restore the loss of competition brought about by the deal across each of the 35 local areas. The regulator noted that while the number of McColl’s stores that Morrisons is proposing to sell is lower than the number of areas in which concerns were identified, the sale of some stores would address the concerns in multiple areas.
The CMA is now consulting on the proposals for the sale of these stores. If it accepts the proposals, the deal would be cleared to proceed.
“Our preliminary view is that the sale of these stores will preserve competition in these local areas and prevent consumers from losing out due to this deal, at a time when shoppers are already facing rising prices,” said Sorcha O’Carroll, CMA Senior Director of Mergers.
“If, after reviewing the responses to our consultation, we conclude that the competition issues have been addressed, the deal will be cleared.”
The CMA issued an initial enforcement order on the deal at the end of May, which meant both chains had to continue operating separately until the investigation was completed. However, the regulator has been working closely with Morrisons to ensure that it can provide support to the ailing retailer during the investigation.
McColl’s operates over 1,100 convenience stores, while Morrisons (now owned by CD&R) has around 500 outlets. CD&R is also the parent company of the Motor Fuel Group (MFG), which owns over 800 convenience stores on petrol forecourts.
Last month, Morrisons revealed that it wants to open thousands of Morrisons Daily convenience stores.
NAM Implications:
- Given the radical changes in market conditions…
- …including the increased costs of servicing debt…
- …there was never going to be much resistance to CMA conditions.
- Therefore all stakeholders should anticipate a favourable result…
- …and optimise the advantages ASAP.
