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CMA warns Morrisons takeover could push up fuel prices in 121 locations

·3-min read
Morrisons has 339 forecourts at its supermarkets
Morrisons has 339 forecourts at its supermarkets. Photo: Keith Mayhew/SOPA Images/LightRocket via Getty Images

Britain's competition regulator has warned that the takeover of supermarket Morrisons could lead to higher fuel prices in 121 locations across the UK.

In January the Competition and Markets Authority (CMA) launched an investigation into a deal arranged by the private equity firm Clayton Dubilier & Rice (CD&R) £7bn ($9.2n) to acquire the supermarket chain.

CMA said "the deal could lead to an increase in prices" due to a lack of competition from other players in the 121 local areas.

Bradford-based Morrisons, UK's fourth largest grocery chain, has 339 forecourts at its supermarkets.

Read more: Rishi Sunak cuts income tax and fuel duty

CD&R owns petrol station giant Motor Fuel Group – UK's biggest independent petrol forecourts operator, which runs more than 900 petrol stations under various brands.

The two sides have five days to offer proposals to ease the concerns, after which the CMA has five days to decide whether to accept them or pursue a deeper probe if these concerns are not addressed.

Colin Raftery at the CMA said: "Prices for petrol and diesel have recently hit record highs, which makes it even more important that we don’t allow a lack of competition at the pump to make the situation worse.

"We’re concerned that this deal could lead to higher prices for motorists in some parts of the country. But if CD&R and Morrisons are able to address these concerns, then we won’t need to move on to an in-depth investigation of the merger."

Supermarket rival Asda agreed to sell 27 petrol stations in 2021 in order to help its £6.8bn takeover by the billionaire petrol station entrepreneurs the Issa brothers and British private equity firm TDR Capital following concerns from the competition regulator.

Read more: Supermarkets slash petrol and diesel prices after Rishi Sunak announces fuel duty cuts

Founded in 1978, CD&R is one of the oldest private equity houses on the market, and now has more than $30bn (£22.7bn) invested in a businesses across multiple different industries. With offices in New York and London, it says it has an aggregate transaction value in excess of $140bn.

CD&R counts corporate heavyweights among its top brass, with a certain pedigree in the British grocery trade. In 2011, Sir Terry Leahy, former CEO of Tesco (TSCO.L) became a senior advisor to the firm.

CMA's warning comes after a recent surge in the price of petrol and diesel. The average cost of a litre of petrol at UK forecourts was 167.30p on Tuesday, while diesel was 179.72p, with the cost of filling an average 55-litre family car to hit £100, according to figures from RAC.

UK chancellor Rishi Sunak announced a cut to fuel duty in his Spring Statement to combat soaring prices at petrol pumps after Russia’s invasion of Ukraine sent costs even higher. He revealed a temporary 5p per litre reduction until March 2023, the biggest rate cut on record.

On Wednesday, Morrisons said it would lower prices by 5p per litre. "Following the chancellor’s announcement regarding the 5p duty reduction on fuel, prices at Morrisons petrol station pumps will reduce by 5 pence at 6pm on Wednesday," the company said.

Other supermarkets including Asda, Sainsbury’s (SBRY.L) and Tesco also said they would be passing on the price reduction to customers.

Watch: Why are gas prices rising?

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