The Competition and Markets Authority (CMA) has launched an investigation into the rescue deal to save high street convenience retailer McColl’s by supermarket giant Morrisons.
It has confirmed that it has launched the inquiry by issuing an initial enforcement order addressing competition concerns in the UK retail sector.
This means that while the investigation is underway, Morrisons and McColl’s must conduct business in a competitive manner, with no integration of the two businesses.
Bradford-based Morrisons, is owned by US private equity firm Clayton, Dubilier & Rice and announced on 9 May that it had acquired all of the McColl’s estate totalling more than 1,200 stores. The supermarket chain already has a partnership with McColl’s through the Morrisons Daily stores.
The successful bid for the McColl’s business brokered by consultancy firm PwC protected 16,000 jobs and led to Morrisons taking on McColl’s pension liabilities and its £170 million debt.
However, it was a contentious bidding process as the UK’s fourth largest supermarket faced stiff competition from the billionaire Issa brothers’ EG Group that already owns British supermarket Asda in a partnership with investment firm TDR Capital.
A spokesman for the CMA said: “We’re aware of the circumstances surrounding Morrisons buying McColl’s convenience stores.
“Now that the businesses have told us that they intend to submit the deal for our review, we will conduct our investigation as promptly as possible.
“Imposing an interim enforcement order is standard practice where a deal has already completed — but we’ve worked closely with Morrisons to ensure that it can provide the support that McColl’s needs to continue to operate during our investigation.”
Last year, McColl’s raised £30 million from shareholders to boost its presence through its partnership with Morrisons, but said that its business was still reeling from being hit by diminished footfall in the coronavirus pandemic.