CMA probes Asda’s £611m Co-op petrol station takeover deal over fears it could hike fuel prices
Asda’s £611m takeover over of 132 Co-op petrol stations has come under scrutiny from the UK’s competition watchdog over concerns the deal was likely to push up fuel prices.
After the supermarket snapped up the sites last October the Competition and Markets Authority (CMA) launched a Phase 1 investigation at the start of this year amid fears that Asda would “not face sufficient competition after the merger” and ultimately lead to consumers and businesses in these areas facing higher prices or lower quality services when shopping.
Asda, which is owned by the billionaire Issa brothers and TDR Capital, said that these concerns would not arise in these areas because the merger would enable Asda to “bring its low-cost pricing model to more customers”.
Mohsin Issa, co-owner of Asda said that it is “looking forward” to working constructively with the CMA over the coming days as it considers their findings.
Asda has five days to offer legally binding proposals to the CMA to address the competition concerns identified and if the watchdog does not deem the explanation valid it will launch a an in-depth, Phase 2 investigation.
“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,” said Colin Raftery, CMA senior director of mergers.
Alex Haffner, partner and specialist competition and regulatory lawyer at law firm Fladgate, added: “The retail supply of motor fuel has been under extra scrutiny from the UK competition authorities with particular concerns raised that retailers may not have been passing on recent falls in the wholesale cost of fuel to consumers.
“That said, the remedies proposed by the CMA is clear-cut and Asda may well see it as a price worth paying to avoid the uncertainties of a second stage merger investigation which would otherwise materialise should it decide not to accept them.”
It comes as Asda has launched a £8.6bn review of its property estate as owners behind the business scramble for options to reduce its debt pile.
The Issa brothers, which acquired Asda last year in a multi-million takeover deal, were also reported to be potentially merging the business with its petrol forecourts business EG Group before EG’s 2025’s £7bn refinancing.