Watchdog to mount full investigation into Poundland’s £55m takeover deal

THE proposed £55m acquisition of 99p Stores by single price retailer Poundland is to face a full investigation by the competition watchdog.

The Competition and Markets Authority has confirmed it is taking the proposed deal to the next level by mounting an in-depth phase 2 investigation.

Black Country-based Poundland has admitted it is unhappy about the move and has warned it may pull out of the acquisition. At the moment it is exploring its options.

The company said in a statement on Friday: “After careful consideration, Poundland has decided not to offer remedies to the CMA.

“Poundland has written to the CMA to request the standard three week suspension of the commencement of that Phase II review. During this period, Poundland will continue to consider carefully whether to proceed with a Phase II review or to withdraw from the proposed transaction.”

The CMA said earlier this month that it would refer the merger for a full investigation unless both Poundland and 99p Stores offered “acceptable undertakings” to address its concerns.

Initiating its review, the CMA said it had found 80 local areas where the retailers are competitors and a further 12 where they will be in the near future due to new store openings.

In a statement, the CMA said: “Insufficient evidence was available at the CMA’s initial phase of investigation for it to be confident that the transaction would not result in a realistic prospect of a substantial lessening of competition through a possible reduction in quality, fewer promotions or closure of stores.

“As the parties have not offered any undertakings, the CMA will now start an in-depth merger investigation to decide whether the merger raises substantial competition problems that need to be remedied.”

A decision on the merger will be made by a group of independent panel members supported by a case team of CMA staff. The group must publish its final decision by October 2, 2015.

Poundland has said it will make a further announcement in due course.