The Competition and Markets Authority (CMA) has raised concerns over 13 sites that form part of the 132 that have been acquired by Asda from The Co-op Group.
Announced in August 2022 and completed in October 2022, the 132 sites included 129 existing sites and three development sites, for a cash value of £438m plus lease liabilities of £173m.
The deal was investigated by the CMA which raised concerns over consumers and businesses in certain areas facing higher prices or lower quality services when shopping or buying fuel.
During the investigation, Asda had told the CMA that competition concerns would not arise in these areas because the merger would enable Asda to bring its low-cost pricing model to more customers. However, the CMA’s investigation focussed on local areas in which the merging businesses currently compete for customers, and in which “Asda is already an important option for customers, who already have access to Asda prices”. The CMA found that allowing Asda to acquire more sites in those areas would leave it facing insufficient competition in future, could therefore risk worse outcomes for customers.
Commenting on the findings CMA senior director of mergers Colin Raftery said
“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.
“While competition concerns don’t arise in relation to the vast majority of the 132 sites bought by Asda, there’s a risk that customers could face higher prices or worse services in a small number of areas where Asda would face insufficient competition in either groceries or fuel after the deal goes through”.
Of the 13 locations that raised concerns, 10 of them involved the price of petrol, they are: Barnard Castle; Calcutt, Caledonian Road; Gnosall (Station Road); Lauder; Minsterley; Oakdale (Ripon Road),Harrogate; Rochester; Stonehaven (Kirkton Road); Weycock Cross in Barry and Earlston in Scotland. The Earlston site also raised concerns in relation to groceries, along with sites in St Columb Minor (Henver Road), and East Peckham.
Asda now has five working days to offer legally binding proposals to the CMA to address the competition concerns identified and then the CMA has a further five working days to consider whether these proposals address its concerns, or if the case should be referred to an in-depth, Phase 2 investigation.
In response, Mohsin Issa, co-owner of Asda said: “We note the findings of the CMA’s Phase 1 inquiry into our acquisition of 132 Co-op stores and their identification of 13 potential areas of competition concern. We look forward to working constructively with the CMA over the coming days as we consider their findings. 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.”
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