Fuel cost fears lead to probe into £7bn acquisition

The Competition and Markets Authority (CMA) is launching a full inquiry into the £7bn acquisition of Morrisons by US investment group Clayton, Dubilier & Rice.

The decision follows the CMA announcing an initial enforcement order last October.

The inquiry will consider whether the deal, which was the result of an auction following a bidding war between CDR and Fortress and was decided on a 1p margin, will result in a “serious lessening of competition” with a focus upon petrol prices.

A similar investigation came about following the purchase of Asda by the Issa brothers and TDR Capital, with the investigation ending when the brothers agreed to sell 27 petrol station forecourts to address concerns over prices at the pumps.

This latest phase builds on the October action which stopped CD&R from integrating its existing 900 forecourt petrol station business, MFG, with Morrison’s 300 stations.

Petrol prices have been a crux for a number of supermarket deals with the earlier Sainsbury’s and Asda merger in 2019 abandoned when the CMA concluded the deal would lead to price rises.

The initial enquiry will now accept comments and responses from interested parties until 10 February after which the CMA has until 24 March to announce its decision on whether to refer the merger to a phase 2 investigation.

Andrew Taylor a partner at Aldwych Partners noted he was sure that CD&R would have expected this situation and will have “identified the site that will need to be sold”.

He added however that the inquiry may be prolonged as a result of reports such as those published in the national press last year about reduced competition at the pumps.

Explaining: “I don’t think this will prevent the CD&R/Morrisons deal from going through, but it might make the review process a bit tougher than it otherwise would have been.”

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