CMA accepts Co-op store sell-off plan in Southern merger deal

The Competition & Markets Authority has accepted a Co-op Group proposal to sell 15 of its convenience stores and two funeral homes to address competition concerns raised by the watchdog over Co-op’s planned merger with Southern Co-op.

Concluding its phase 1 investigation into the merger last week, the CMA identified concerns over a potential significant lessening of competition in local areas surrounding nine Co-op Group stores and 10 Southern branches, as well as one funeralcare outlet owned by each retailer.

Both Co-op and Southern accepted that the deal raised these competition concerns and asked the CMA to fast-track the case by taking into consideration undertakings in lieu that would address them.

The watchdog said today that it had “provisionally found that the proposed sales in each local area put forward by the businesses could address the CMA’s concerns”.

It will now proceed to consider them in more detail, including seeking third-party feedback and then considering potential buyers. If the CMA is satisfied that the undertakings address its concerns, it will conditionally clear the deal.

“We were concerned that this merger could reduce competition for convenience store shoppers and people arranging funerals in several local areas in southern England,” said CMA executive director for mergers Joel Bamford.

“The businesses have engaged constructively to find a solution to these concerns and offered to sell stores and funeral homes in each of the problematic areas. Having reviewed these proposals, we provisionally believe they could resolve our concerns and allow us to clear the deal while protecting competition for the benefit of people in these local communities.”

A Co-op spokeswoman said: “We welcome the CMA’s provisional acceptance of the remedies proposed as part of its review of the Southern Co-op transaction.

“The remedies relate to 17 locations where the CMA identified competition concerns because Southern Co-op and Co-op Group stores or funeral homes are in close proximity.

“We will now work through the next steps and will keep colleagues informed. At this stage, there are no changes for colleagues, members or customers.”