The Competition and Markets Authority has waved through Poundland‘s £55m acquisition of 99p stores, an established rival, saying that the company will face sufficient competition to stop it from lowering the quality of its products.
The watchdog, which launched a probe into the deal when it was agreed in February, has said that Poundland “will still face competition from other value retailers such as B&M, Home Bargains, Wilko and Bargain Buys, along with Tesco and, to an extent, Asda…” and thus the company will “not have an incentive to reduce the quality of its offering, either at a local or at the national level.”
Consumers enjoy an abundance in choice at the moment, particularly with the ongoing price-war between the ‘big four‘ supermarkets and discounters, which ensures that customers are offered competitive prices as well as quality. The CMA‘s role is to ensure that dealings between companies will not reduce competition or leave customers worse off.
“On the basis of the evidence to date, we do not think customers will be worse off from the merger,” said Philip Marsden, chair of the CMA Inquiry Group, in August.
Jim McCarthy, Chief Executive of Poundland, said: “We welcome the CMA‘s decision to clear the merger. We believe that the acquisition of 99p Stores will be great for both customers and for shareholders and we will now move to completion by the end of the month.”