The Competition and Markets Authority has cleared the Co-op’s £137.5m takeover of buying group Nisa, saying "the proposed merger does not give rise to competition concerns”. Co-op is now likely to take over the running of Nisa in May.
Competition between shops unaffected
Co-op, as a groceries retailer, and Nisa, as a groceries wholesaler, do not compete head-to-head. However, as Nisa supplies more than 4,000 grocery stores, the CMA said it had carefully considered the potential impact of the merger on competition between shops.
As part of the “phase 1” investigation, the CMA took into account that Nisa-supplied stores would still be free to set their own prices and decide which products to stock after the merger. It concluded that the merged company would not be able to directly determine how they compete.
Stores and shoppers free to shop around
It also examined whether the merged company could raise prices or reduce service quality for retail or wholesale customers but found that existing retail and wholesale competition made this unlikely. As Nisa-supplied stores are able to choose between several different wholesalers, they would be able to switch supplier if prices were to increase or the quality of service go down as a result of the merger.
As far as shoppers are concerned, the CMA felt there were enough local alternatives to both Co-op and Nisa-supplied stores to ensure that people could still shop around to get the best value.
In conclusion, it said that this all meant that the merged company would be unlikely to be able to raise prices or offer a worse service to either stores or to shoppers.
Co-op expects to start running Nisa in May
The decision not to send the deal to a ‘phase 2’ investigation means that the Co-op now expects to take over the running of Nisa in early May.
Sheldon Mills, senior director of mergers at the CMA, said: “Millions of people throughout the UK shop at convenience stores and supermarkets, and it is vital that they continue to have enough choice to get the best value for them. After careful consideration, we’ve found that there is sufficient competition in both the wholesale and retail sectors to ensure that shoppers are not worse off.”
Co-op Retail CEO Jo Whitfield commented: “We’re delighted with the CMA decision and are really excited about sharing our plans for the future once we gain court sanction.”
Peter Hartley, chairman of Nisa, added: “Today’s ruling by the CMA is excellent news, and a significant step towards finalising the transaction that our members voted for last November. We are very excited about our future together which will help ensure that our members are best placed to serve their communities.”
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