Asda Group Ltd.’s £600 million ($730million) Co-operative Group Ltd. gas station deal raises concerns about competition and it must offer proposals to avoid an extensive probe, the UK’s antitrust watchdog stated.
Tuesday’s statement by the Competition and Markets Authority stated that the deal raises antitrust concerns in 13 locations throughout the UK and could result in consumers and businesses paying higher fuel prices and receiving lower quality services. CMA granted the firm five days to submit solutions to the problems. The watchdog may then launch an investigation.
In August, the third-largest UK grocer signed an agreement to purchase 132 grocery retail and gas filling stations nationwide. Three of these are development plots. The deal would see approximately 2,300 Co-op employees transfer to Asda, it said.
Mohsin Issa (co-owner of Asda) said, “We look forward working constructively with CMA over the next days as they consider their findings.” “We are committed to our long-term strategic to build a convenience company and bring Asda’s great value in fuel, groceries to more customers.
Asda was previously under scrutiny by the CMA over filling stations. Fuel pricing is now a major focus of the agency. When Asda acquired a majority of its shares, the Issa brothers and TDR Capital negotiated to sell 27 stations. Clayton Dubilier & Rice LLC offered 87 stations for the purchase of WM Morrison Supermarkets Ltd, which was worth £7 billion.
“Groceries, fuel and food account for a significant portion of household budgets. It’s important that deals that reduce competition between fuel and grocery suppliers don’t make things worse, Colin Raftery, senior director of mergers at the CMA, stated.