The Competition and Markets Authority (CMA) has identified 35 local areas where the proposed merger between Morrisons and McColl’s would raise competition concerns.
Revealed as part of its Phase 1 investigation, the CMA found that the merger between Morrisons and McColl’s raises competition concerns in 35 areas, where McColl’s or MFG convenience stores will face reduced competition if the deal is allowed to go ahead as planned. The CMA warned that “weaker competition could lead to higher prices or a lower quality service for the customers in these areas who rely on their local shops for groceries”.
The merger was announced in May 2022 when Morrisons bought McColl’s, transferring around 16,000 staff and 1,100 shops and rescuing McColl’s two pension schemes which have more than 2,000 members.
In the same month, the CMA said it was going to investigate the deal to assess if it is expected to result in a “substantial lessening of competition in any market or markets in the United Kingdom”.
According to the CMA, During the investigation, the retailers accepted that the merger would raise concerns in some areas and asked to move straight to a discussion of remedies to address these competition concerns.
Morrisons has five working days to offer proposals to the CMA to address the competition concerns identified and then the CMA would then have a further five working days to consider whether to accept these in principle instead of referring the case to a Phase 2 investigation.
Commenting on the investigation, Sorcha O’Carroll, CMA senior director of mergers, said:
“As the cost of living soars, it’s particularly important that shops are facing proper competition so that customers get the best prices possible when picking up essentials or doing the weekly shop.
“While the vast majority of shoppers and other businesses won’t lose out, we’re concerned that the deal could lead to higher prices for people in some areas. If Morrisons and McColl’s can address these concerns, then we won’t need to move on to an in-depth investigation. In the meantime, we’re working closely with Morrisons to ensure that it can provide the support that McColl’s needs to continue to operate during our investigation.”
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