CMA says Asda’s £600m takeover of Co-op petrol stations ‘could increase prices’

The Competition and Markets Authority (CMA) has said that Asda’s £600m takeover of 132 Co-op petrol stations ‘could increase prices’ or mean less choice for consumers as it raises competition concerns.

The Phase 1 investigation launched in January 2023 and focused on 13 local areas in which Asda and the Co-op sites it has acquired currently compete for customers and would not face sufficient competition after the merger.

The CMA found that the deal, which was first completed in October last year, could lead to consumers and businesses in these areas facing higher prices or lower quality services when shopping or buying fuel.

This merger will be referred for an in-depth, Phase 2 investigation unless the parties offer acceptable undertakings to address these competition concerns. Asda now has five working days to offer legally binding proposals to the CMA to address its concerns.

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In its defence, Asda told the CMA that competition concerns would not arise in these areas because the merger would allow it to bring its low-cost pricing model to more customers.

However, the CMA investigation focused on local areas where both retailers already operate, meaning Asda prices are already an option for those customers. It found that allowing Asda to acquire more sites in those areas could reduce competition in future.

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.”

“Groceries and fuel account for a large part of most household budgets,” added senior director of mergers Colin Raftery.

“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, 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.”