The Competitions and Markets Authority has launched a formal inquiry into the planned acquisition of McColl’s Retail Group (GB:MCLS) by supermarket giant Morrisons.
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The CMA will start with phase one of the inquiry and decide whether further investigation is warranted, with the first phase to conclude by September 8.
Phase one will cover a basic review of the acquisition, and the CMA has invited comments from interested parties.
The CMA 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.”
Struggling chain
In May 2022, Morrisons agreed to acquire McColl’s for £190 Million, to save it from insolvency.
Morrisons confirmed its intentions to take all McColl’s 1,160 stores and 16,000 employees along with its two pension schemes, under its control.
Convenience store chain McColl’s was not able to cope with supply chain disruptions, leading to higher costs and increasing debt.
The shares of McColl’s were suspended from the London Stock Exchange. The shares had already lost a majority of their value and were trading at 1.8p per share. The suspension was due to the non-submission of its annual reports and failure to meet the deadline.
Trying to build synergy
Morrisons already has a partnership with McColl’s as a wholesale supplier. Under this, many of McColl’s shops have been rebranded as Morrisons Daily convenience stores.
Morrisons chief executive David Potts said: “This transaction offers stability and continuity for McColl’s business and, in particular, a better outcome for its colleagues and pensioners. We all look forward to welcoming many new colleagues into the Morrisons business and to building on the proven strength of the Morrisons Daily format.”
