Britain's competition regulator has ruled that US private equity firm Clayton, Dubilier & Rice's takeover of supermarket group Morrisons could lead to higher fuel prices in 121 locations across the country where both firms own forecourts.
CD&R is the owner of the Motor Fuel Group (MFG), which with 921 petrol stations is the largest independent operator in the United Kingdom. Morrisons operates 339.
The Competition and Markets Authority said on Thursday that its 'Phase 1' probe into the merger found the deal raised competition concerns in 121 areas in the UK, where both MFG and Morrisons had petrol forecourts.
Motor Fuel Group operates petrol stations in England, Scotland and Wales under several brands, such as Esso, BP, Shell, Texaco, Jet and Murco.
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Colin Raftery, senior director of mergers at the CMA, said, "Prices for petrol and diesel have recently hit record highs, which makes it even more important that we don’t allow a lack of competition at the pump to make the situation worse.
"We’re concerned that this deal could lead to higher prices for motorists in some parts of the country. But if CD&R and Morrisons are able to address these concerns, then we won’t need to move on to an in-depth investigation of the merger."
CD&R has the option to offer proposals to address the concerns raised by the CMA within five working days.
The CMA would then take another five working days to consider whether to accept the proposals in principle instead of referring the case to a Phase 2 investigation.
Last year, the competition regulator raised fuel price concerns over Issa brothers and private equity group TDR Capital's £6.8 billion (€8.15 billion) takeover of the Asda supermarket chain.
News by Reuters, additional reporting by ESM – your source for the latest Retail news. Click subscribe to sign up to ESM: European Supermarket Magazine.