Watchdog warns Asda sale could hit fuel prices

The sale of Asda to the billionaire Issa brothers and private equity firm TDR Capital  could lead to increases in the price of petrol according to the Competition and Markets Authority (CMA).

As part of an investigation launched at the end of last year into the takeover of the supermarket chain by the founders of EG Group and TDR Capital, the CMA found “local competition concerns” relating to fuel prices in specific areas of the country.

In a statement the CMA said that EG Group which operates 395 petrol stations across the UK and Asda which owns 323  are located in the same parts of the country. It highlighted that in 36 areas across the country the deal could impact the supply of road fuel and “lead to higher prices for motorists in these locations”.

Joel Bamford, senior director of mergers at the CMA 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.”

The Issa brother and TDR Capital now have five working days to “offer legally binding proposals” to the CMA that address its concerns. The watchdog then has a further five days to decide whether to refer the case to a phase 2 investigation.

Bamford added: “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 Issa brothers and TDR Capital have stated they will work with the CMA to find a solution, with a spokesperson commenting: “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.”