The Co-operative Group’s takeover of Somerfield should not proceed as it will lead to a significant lessening of competition in the c-store sector. This is the view of Adrian Costain, MD of independent retail chain Pareto Retail, who estimates that should the deal go through the Co-op and Tesco would between them control more than 80% of the “core” convenience sector. Costain has therefore asked the OFT to refer the Co-op/Somerfield deal to the Competition Commission.

The proposed £1.57bn takeover of Somerfield was agreed in July and is currently being looked at by the OFT. Its decision is due in the next few weeks. Costain, who defines “core” as stores with weekly sales of £20,000 or more, said as well as a reduction in competition the merger would create new barriers to entry for independents.

The Co-op Group already wielded a 5% buying power advantage over independents, he claimed, which gave it the ability to outbid small rivals for store sites by a factor of 100%.

“The regulators’ view of the convenience and top-up sector is incomplete,” said Costain. “This is why even now so soon after the latest Commission inquiry, there needs to be another inquiry into the convenience sector.”