Morrisons’ takeover of convenience chain McColl’s will “not harm the vast majority of shoppers or other businesses”, the competition regulator has said following a probe of the deal.
The Competition and Markets Authority (CMA) said its initial investigations found 35 local areas where the two brands would compete.
Morrisons said it now hopes for a “swift conclusion” to the £190 million merger deal.
It comes after Morrisons was acquired by US private equity firm Clayton, Dubilier & Rice (CD&R), the parent company of 800-strong petrol forecourt giant MFG, for £7 billion last year.
The Bradford-based supermarket chain agreed to buy McColl’s in a rescue deal in May after the retailer collapsed into administration in light of soaring costs due to supply chain disruption, inflation and its large debt burden.
In July, the CMA first launched a phase one probe into the move amid concerns it could lessen competition.
“Following its investigation, the CMA has found that the merger between Morrisons and McColl’s raises competition concerns in 35 areas, where McColl’s or MFG convenience stores will face reduced competition if the deal is allowed to go ahead as planned,” the regulator said on Thursday.
“Weaker competition could lead to higher prices or a lower quality service for the customers in these areas who rely on their local shops for groceries.”
Morrisons now has five working days to submit proposals to ease these competition concerns.
Sorcha O’Carroll, CMA senior director of mergers, said: “As the cost of living soars, it’s particularly important that shops are facing proper competition so that customers get the best prices possible when picking up essentials or doing the weekly shop.
“While the vast majority of shoppers and other businesses won’t lose out, we’re concerned that the deal could lead to higher prices for people in some areas.
“If Morrisons and McColl’s can address these concerns, then we won’t need to move on to an in-depth investigation.
“In the meantime, we’re working closely with Morrisons to ensure that it can provide the support that McColl’s needs to continue to operate during our investigation.”
A Morrisons spokesman said: “We welcome the announcement today by the CMA that the acquisition of McColl’s only raises concerns in a small number of local areas.
“We will now work closely with the CMA on our proposed remedies in these 35 local areas and look forward to a swift conclusion of the process.”