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UK competition watchdog set to approve Morrisons’ McColl’s takeover

UK competition watchdog set to approve Morrisons’ McColl’s takeover
UK competition watchdog set to approve Morrisons’ McColl’s takeover

UK’s competition regulator, Competition and Markets Authority, has reportedly stated that it plans to accept proposals from Wm Morrisons Supermarkets, UK’s fourth largest UK supermarket chain, that would quell any concerns regarding higher prices to consumers, as the firm moves to acquire fellow convenience shop operator, McColl’s.

The Competition and Markets Authority (CMA) had previously raised competition-related concerns around a few areas of the £190 million ($184 million) Morrisons-McColl’s takeover deal.

However, now the government body has stated that there are no concerns of potentially lower service quality or higher prices for customers across a majority of the areas.

Under the proposal, Bradford-based Morrisons has offered to sell off 28 stores of the Brentwood-based McColl's Retail Group to parties approved by the regulator. Among these will be 26 stores in England, and one each in Wales and Scotland.

On 10th October, the CMA stated that it felt the proposal will be suitable for restoring the loss of competition that might have otherwise happened from the deal.

Once these proposals are formally accepted by the regulator, the acquisition would be cleared to go ahead.

Sorcha O’Carroll, Senior Director of Mergers, CMA, stated that the agency’s preliminary view is that by divesting those stores, competition will be maintained in the concerned local areas. The move would also ensure that consumers do not lose out from the deal, especially amid the rising cost-of-living crisis.

O’Carroll added that after reviewing the responses to its consultation, if the CMA concludes that competition issues have been resolved, the acquisition offer will most likely receive a go-ahead.

McColl’s operates a network of over 1,100 stores across Scotland, England, and Wales, which includes convenience shops, newsagents, and post offices. In comparison, Morrisons operates around 500 stores.

The operator of Morrisons chain of stores, Clayton, Dubilier & Rice, also currently owns forecourt operator, Motor Fuel Group, which has more than 800 convenience stores under its belt, with most of them coming with their own attached petrol stations.

The two groups admitted previously that a merger would trigger concerns in a few areas, and hence launched discussions to resolve the issues.

Earlier in May, McColl’s was on the verge of collapse due to a £97 million ($94 million) debt pile. Morrisons then agreed on a rescue deal, worth £190 million ($184 million).

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