Competition watchdog raises concerns over Asda acquisition

The CMA (Competition and Markets Authority) has raised concerns about the £6.8bn acquisition of supermarket chain Asda, saying it could lead to higher petrol prices in some parts of the country.

Last October a deal was announced to take control of Leeds-based Asda by Bellis, a company jointly owned by the Issa Brothers who own Blackburn-based petrol forecourts group EG, and TDR Capital.

EG Group operates 395 petrol stations in the UK, while Asda owns 323.

Many of Asda’s and EG’s petrol stations are located in the same parts of the UK and the investigation by the CMA focused on these overlaps.

The CMA said it has found that the deal raises local competition concerns in relation to the supply of road fuel in 36 areas across the UK and the supply of a specific type of fuel – called auto-LPG – in a further area.

It is concerned that the merger could lead to higher prices for motorists in these locations.

Joel Bamford, CMA senior director of mergers, said: “Our job is to protect consumers by making sure there continues to be strong competition between petrol stations, which leads to lower prices at the pump.

“These are two key players in the market, and it’s important that we thoroughly analyse the deal to make sure that people don’t end up paying over the odds.

“Right now, we’re concerned the merger could lead to higher prices for motorists in certain parts of the UK.

“However, if the companies can provide a clear cut solution to address our concerns, we won’t carry out an in-depth phase 2 investigation.”

The buyers now have five working days to offer legally binding proposals to the CMA to address the competition concerns identified.

The CMA then has a further five working days to consider whether to accept any offer, instead of referring the case to a phase 2 investigation.

A spokesperson for the Issa brothers and TDR Capital said: “We will be working constructively with the CMA over the course of the next 10 days in order to arrive at a satisfactory outcome for all parties within phase 1.

“This would provide welcome certainty for our colleagues, suppliers and customers, and allow us to move forward with our exciting plans for investment and growth at Asda.”