The Competition and Markets Authority has warned deal could “substantially” lessen competition in the sector
The Co-operative Group’s proposed takeover of rival Southern Co-op could be heading for a full-scale inquiry after the UK’s competition watchdog raised concerns over the deal.
The Competition and Markets Authority (CMA) has warned that the agreement between the two mutuals, first announced in April, could “substantially” reduce competition within the sector.
The regulator has given the firms until September 22 to put forward remedies to address any potential competition concerns.
Should the proposals prove unacceptable, the planned acquisition will be referred for a so-called phase two investigation.
The CMA said: “The CMA has decided, on the evidence currently available to it, that it is or may be the case that this merger has resulted or may be expected to result in a substantial lessening of competition within a market or markets in the United Kingdom.
“This merger will be referred for an in-depth, phase two investigation unless the parties offer an acceptable undertaking to address these competition concerns.”
The Co-op’s move would bring Southern Co-op’s 330,000 members into its existing base of seven million, along with approximately 300 food, funeral and Starbucks coffeehouse sites.
The two firms, which have not disclosed the financial terms of the deal, are continuing to operate independently while the CMA’s investigation proceeds. They had previously hoped to finalise the merger towards the end of the year, following approval by members in May.
A Co-op Group spokesperson stated that the CMA’s concerns centred on a “small number” of locations where stores operated by both brands were in close proximity to one another.
The spokesperson said: “We are pleased that, as anticipated, the CMA hasn’t identified competition concerns at a national level.
“It has identified a small number of locations where there is both a Southern and Co-op Group presence and where they believe there may be an adverse impact on competition for consumers.
“We will continue to engage and work with the CMA on the proposed remedies.
“There are no changes for colleagues, members or customers at this stage.”





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