CMA set to greenlight Morrisons’ McColl’s takeover

The Competition and Markets Authority (CMA) is set to greenlight Morissons’ proposal to acquire McColl’s after accepting proposals for the supermarket giant to sell 28 stores to address competition concerns.

It comes as the authority launched an investigation into Morrisons’ proposed £190m purchase of McColl’s-owned stores last July. Following Phase 1 of the investigation, it found that the deal “would not harm the vast majority of shoppers or other businesses”, but did raise competition concerns in 35 areas. 

According to the CMA, the two retailers accepted these concerns and “engaged with the CMA in discussing potential remedies”.

Morrisons has now offered to divest 28 McColl’s stores to a purchaser or purchasers to be approved by CMA, including 26 stores in England, one in Scotland and one in Wales.

The CMA said it was now “minded to accept these proposals, which appear to be suitable to restore the loss of competition brought about by the deal across each of the 35 local areas”. 

It added that while the number of McColl’s stores that Morrisons is proposing to sell is lower than the number of areas in which concerns were identified, the sale of some stores would address concerns in multiple areas.

The CMA is now consulting on the proposals for the sale of these stores and if it accepts the proposals, the deal will be cleared to proceed.

Sorcha O’Carroll, CMA senior director of Mergers, said: “Our preliminary view is that the sale of these stores will preserve competition in these local areas and prevent consumers from losing out due to this deal, at a time when shoppers are already facing rising prices. If, after reviewing the responses to our consultation, we conclude that the competition issues have been addressed, the deal will be cleared.”

Last May, Alliance Property Holdings Limited, part of the Morrisons Group, secured a rescue deal for embattled retailer McColl’s that would see all 16,000 staff transferred, alongside more than 1,100 nationwide outlets.

The deal also saw Morrisons agree to rescue the group’s two pension schemes which have more than 2,000 members.

McColl’s previously fell into administration after facing financial pressure over recent years resulting from Covid-19 related disruption and, most recently, supply chain challenges, creating issues in product availability.