The Co-op’s deal to buy eight My Local stores has moved a step closer to approval from the Competition & Markets Authority.
The CMA said it had received reassurance from The Co-op over its competition concerns by its deadline of 26 October.
This had given it “reasonable grounds” to believe that the undertaking the retailer offered, or a modification of it, might solve the “substantial lessening of competition” it had identified in part of the deal.
The CMA now has until 30 December to make a final decision or it could let it drag on to 27 February if it is still not satisfied.
The deal was announced in early July after My Local CEO Mike Greene put the 125-store business into administration less than a year after buying it from Morrisons for £25m. Some 90 stores closed immediately, resulting in a significant number of redundancies among the 1,658 staff.
In August the CMA said it would be investigating the risk of competition overlaps as the Co-op already owned stores in all eight areas where the My Local stores were.
It updated its position last month saying it had competition concerns in only one area - Widnes in Cheshire - where the Co-op already owned three stores in close proximity to each other.
“In most of the areas where the Co-op acquired My Local stores, there was sufficient rivalry from other grocery retailers,” said Sheldon Mills, CMA senior director of mergers and decision maker in this case.
“However, in Widnes before the merger, Co-op had a strong presence with three convenience stores in the local area. Therefore, we believe that the merger may lead to competition concerns.”
The CMA said the My Local store and the Co-op’s existing stores in Widnes competed closely before the acquisition.
But subsequently only one other convenience store was likely to compete effectively with the Co-op. Other grocery stores in the area would exercise less of a competitive constraint because they sold different products, and customers would need to travel further to reach those stores.