Asda takeover could lead to higher petrol prices, warns competition watchdog
The UK competition watchdog has warned that the £6.8 billion takeover of Asda by forecourt tycoons the Issa brothers could lead to higher petrol prices for motorists in some areas.
The Competition and Markets Authority (CMA) said that investigations have raised “local competition concerns in relation to the supply of road fuel in 36 areas across the UK”.
EG Group, the forecourt giant owned by Mohsin and Zuber Issa, operates 395 petrol stations, while Asda owns 323 sites.
In October, EG Group and private equity backers TDR Capital agreed a deal to take control of the UK supermarket chain from US retail giant Walmart.
Two months later, the CMA formally launched an initial phase one probe into the deal to consider whether the tie-up would result in a “substantial lessening of competition”.
The CMA said that it has now found competition issues at the 36 locations as well as one other area, where it has specific concerns regarding the supply of a type of fuel called auto-LPG.
It said the buyers now have five working days to offer a solution to address these competition concerns.
The regulator said it will then have a further five days to consider whether it will accept these terms to or call for a more thorough investigation.
Joel Bamford, senior director of mergers at the CMA, said: “Our job is to protect consumers by making sure there continues to be strong competition between petrol stations, which leads to lower prices at the pump.
“These are two key players in the market, and it’s important that we thoroughly analyse the deal to make sure that people don’t end up paying over the odds.
“Right now, we’re concerned the merger could lead to higher prices for motorists in certain parts of the UK.
“However, if the companies can provide a clear-cut solution to address our concerns, we won’t carry out an in-depth phase two investigation.”
A spokeswoman for the Issa brothers and TDR Capital said: “We will be working constructively with the CMA over the course of the next 10 days in order to arrive at a satisfactory outcome for all parties within phase one.
“This would provide welcome certainty for our colleagues, suppliers and customers, and allow us to move forward with our exciting plans for investment and growth at Asda.”