Morrisons faces competition probe into McColl’s takeover

The UK’s competition watchdog has confirmed the launch of a ‘phase one’ investigation into Morrisons’ takeover of McColl’s.

Bradford-based supermarket chain Morrisons snapped up McColl’s in a £190 million rescue deal in May after the convenience chain collapsed into administration in light of soaring costs due to supply chain disruption, inflation and its large debt burden.

Morrisons held off competition from rivals including forecourt giant EG Group to strike the deal.

Morrisons agreed a rescue deal for McColl’s in May (Ian West/PA)

The Competition and Markets Authority (CMA) filed an initial enforcement order into the deal in May, suggesting it would probe the deal and forcing Morrisons and McColl’s to continue to operate as separate operations until investigations are completed.

However, the CMA has now confirmed it will launch a formal phase one probe –  the initial stage of its merger review process – and has invited comments on the move by interested parties.

It said the probe will consider “whether the creation of that situation may be expected to result in a substantial lessening of competition within any market or markets in the United Kingdom for goods or services”.

Morrisons declined to comment on the investigation.

It also comes a month after the CMA cleared Morrisons’ owner’s £7 billion takeover by US private equity firm Clayton, Dubilier & Rice (CD&R).

The watchdog had raised concerns over the deal’s potential impact on the petrol market, as CD&R also owns Motor Fuel Group (MFG), the UK’s largest independent petrol station operator.

But the deal was approved after CD&R agreed to 87 of its forecourts in order to allay competition concerns.