Independent co-op societies fear they could face direct competition from the multiples after the OFT ruled The Co-operative Group must sell 126 stores as part of its £1.57bn acquisition of Somerfield. Smaller societies say they could find themselves competing with the likes of Tesco Express if the multiples buy the former Somerfield sites.
The OFT ruled that the deal did not create competition concerns at a national level, but said some stores must be sold because they are in areas where independent co-ops – which share the same buying group as the Co-op Group – were already operating. Other sites must be sold because Co-op Group and Somerfield stores are trading in the same area.
“As a regional co-op, we are disappointed by the OFT position, but not surprised,” an independent Co-op executive said. “We are now confronted by the prospect of having potentially bigger hitters facing us. A lot will depend on who gets what and we hope the Co-op Group will consult us in areas where we are directly affected.”
However, other independent societies welcomed the decision. “Although the Co-op Group will have to sell stores off – and not to other local co-op societies – this is a good result,” said Richard Samson, CEO of East of England Co-operative Society. “It will help give the big four a run for their money. Better buying terms will mean more competitive prices for consumers.”
The Co-op Group will now work on a divestment package for the stores and find suitable buyers for the OFT to approve.
The OFT ruled that the deal did not create competition concerns at a national level, but said some stores must be sold because they are in areas where independent co-ops – which share the same buying group as the Co-op Group – were already operating. Other sites must be sold because Co-op Group and Somerfield stores are trading in the same area.
“As a regional co-op, we are disappointed by the OFT position, but not surprised,” an independent Co-op executive said. “We are now confronted by the prospect of having potentially bigger hitters facing us. A lot will depend on who gets what and we hope the Co-op Group will consult us in areas where we are directly affected.”
However, other independent societies welcomed the decision. “Although the Co-op Group will have to sell stores off – and not to other local co-op societies – this is a good result,” said Richard Samson, CEO of East of England Co-operative Society. “It will help give the big four a run for their money. Better buying terms will mean more competitive prices for consumers.”
The Co-op Group will now work on a divestment package for the stores and find suitable buyers for the OFT to approve.
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