The UK’s Competition and Markets Authority (CMA) has ordered the new owners of Leeds-based Asda to address its concerns that their £6.8 billion purchase of the supermarket chain could lead to higher fuel prices to avoid the deal being referred for an in-depth investigation.
Blackburn-based billionaires the Issa brothers and TDR Capital completed the acquisition of a majority ownership stake in Asda from Walmart Inc. in February.
But the CMA said in a statement on Tuesday: “The Issa Brothers and TDR Capital also own EG Group, which operates 395 petrol stations in the UK, while Asda owns 323.
“Many of Asda’s and EG’s petrol stations are located in the same parts of the UK and the investigation by the Competition and Markets Authority (CMA) therefore focused on these overlaps.
“The CMA has found that the deal raises local competition concerns in relation to the supply of road fuel in 36 areas across the UK and the supply of a specific type of fuel – called auto-LPG – in a further area.
“It is therefore concerned that the merger could lead to higher prices for motorists in these locations.”
Joel Bamford, CMA Senior Director of Mergers, said: “Our job is to protect consumers by making sure there continues to be strong competition between petrol stations, which leads to lower prices at the pump.
“These are two key players in the market, and it’s important that we thoroughly analyse the deal to make sure that people don’t end up paying over the odds.
“Right now, we’re concerned the merger could lead to higher prices for motorists in certain parts of the UK.
“However, if the companies can provide a clear-cut solution to address our concerns, we won’t carry out an in-depth Phase 2 investigation.
“The buyers now have 5 working days to offer legally binding proposals to the CMA to address the competition concerns identified.
“The CMA then has a further 5 working days to consider whether to accept any offer instead of referring the case to a Phase 2 investigation.”
Analysts said the buyers of Asda would likely have to agree to sell sites to satisfy the CMA.
“We will be working constructively with the CMA over the course of the next 10 days in order to arrive at a satisfactory outcome for all parties within Phase 1,” said the Issa brothers and TDR in a statement.
“This would provide welcome certainty for our colleagues, suppliers and customers, and allow us to move forward with our exciting plans for investment and growth at Asda.”