The Co-op takeover of supermarket chain Somerfield has been given the go-ahead by the Office of Fair Trading
The Co-op has offered to dispose of some of the stores to resolve competition concerns raised by the merger and the OFT has found issues in 126 local grocery markets across the UK.
After detailed analysis, the OFT said it found that the merger would not give rise to competition concerns at a national level. With a market share of around 8% , the merged firm will be a stronger fifth player to compete against the existing 'big four' national supermarkets – ASDA, J Sainsbury, Wm Morrison and Tesco – and would not increase any risk of coordination between large grocery retailers.
The OFT said of the 126 locations identified that the majority were because ‘Co-op and Somerfield compete closely against one another in the local area concerned.’
It said to manage the risk that there are no eligible buyers for some of these stores, the Co-op has said it would present suitable buyers up-front for the OFT to approve, before it agrees to a finalised remedies package.
John Fingleton, OFT chief executive said: 'Once finalised, the divestment package will directly safeguard the welfare of many thousands if not millions of UK consumers by restoring grocery store competition in the 126 local areas affected, while allowing an otherwise likely pro-competitive merger to go ahead.'