The Competition & Markets Authority has waved through the Co-op’s £137.5m takeover of buying group Nisa.
The competition watchdog said today that following close examination of all the evidence, it found “the proposed merger does not give rise to competition concerns”.
The CMA said that while the Co-op, as a groceries retailer, and Nisa, as a groceries wholesaler, did not compete head-to-head, as Nisa supplies more than 4,000 grocery stores, it had carefully considered the potential impact of the merger on competition between shops.
During the course of its ‘phase 1’ investigation, the CMA took into account that Nisa-supplied stores would still be free to set their own prices and decide which products to stock after the merger, and so the merged company would not be able to directly determine how they compete.
It also examined whether the merged company could raise prices or reduce service quality for retail or wholesale customers. It found that existing retail and wholesale competition made this unlikely.
The CMA felt there were enough local alternatives to both Co-op and Nisa-supplied stores to ensure that people could still shop around to get the best value.
It also said Nisa-supplied stores were able to choose between several different wholesalers and would be able to switch supplier if prices were to increase or the quality of service go down as a result of the merger.
In conclusion, it said that this all meant that the merged company would be unlikely to be able to raise prices or offer a worse service to either stores or to shoppers.
“Millions of people throughout the UK shop at convenience stores and supermarkets, and it is vital that they continue to have enough choice to get the best value for them,” said CMA senior director of mergers Sheldon Mills.
“After careful consideration, we’ve found that there is sufficient competition in both the wholesale and retail sectors to ensure that shoppers are not worse off.”
The decision not to send the deal to a ‘phase 2’ investigation means that the Co-op now expects to take over the running of Nisa in early May.
“We’re delighted with the CMA decision and are really excited about sharing our plans for the future once we gain court sanction,” said Co-op Retail CEO Jo Whitfield.
“Our strategy is to get closer to communities and our new business will create a strong product offer and improved prices for Nisa members that will engage their shoppers across the UK.”
Nisa chairman Peter Hartley added: “Today’s ruling by the CMA is excellent news, and a significant step towards finalising the transaction that our members voted for last November. We are very excited about our future together, which will help ensure that our members are best placed to serve their communities.”