Asda takeover could lead to higher petrol prices, CMA warns

EG Group's Asda takeover could lead to higher petrol prices, CMA warns
The CMA had previously launched an initial phase one probe into the deal to consider whether the tie-up would result in a “substantial lessening of competition”.
// CMA warns that the Issa brothers’ £6.8 billion takeover of Asda could lead to higher petrol prices in some areas
// They now have five working days to offer a solution to address these competition concerns
// CMA would then have a further 5 days to consider whether it will accept these terms to or call for a more thorough investigation

The CMA has warned that the Issa brothers’ £6.8 billion takeover of Asda could lead to higher petrol prices in some areas, but if this was addressed then it could approve the deal.

The UK’s peak competitions authority said investigations have raised “local competition concerns in relation to the supply of road fuel in 36 areas across the UK”.

EG Group, the forecourt giant owned by Mohsin and Zuber Issa, operates 395 petrol stations, while Asda owns 323 sites.


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In October, the Issa brothers and private equity backers TDR Capital agreed a deal to take control of the Big 4 grocer from US retail giant Walmart.

Two months later, the CMA formally launched an initial phase one probe into the deal to consider whether the tie-up would result in a “substantial lessening of competition”.

The CMA said that it has now found competition issues at the 36 locations as well as one other area, where it has specific concerns regarding the supply of a type of fuel called auto-LPG.

It said the Issa brothers and TDR Capital now have five working days to offer a solution to address these competition concerns.

The regulator said it would then have a further five days to consider whether it will accept these terms to or call for a more thorough investigation.

However, should the Issa brothers adequately address the concerns, the CMA said it wouldn’t need to escalate its inquiry to a phase two investigation – effectively leaving the door open for the deal to be rubber-stamped.

“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,” CMA senior mergers director Joel Bamford said.

“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 two investigation.”

A spokeswoman 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 one.

“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.”

The CMA’s approval is the final hurdle needed before the Issa brothers can take full control of Asda.

It had been completed in February, when the Financial Conduct Authority approved the takeover and the parties involved in the acquisition said all deal conditions had been met in full.

with PA Wires

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