UK competition watchdog may subject takeover deal for Morrisons to in-depth probe

The private equity takeover of UK supermarket Morrisons looks set for a more detailed probe by Britain's competition regulator.

US private equity company Clayton Dubilier & Rice has been given five days to address competition concerns in its £7bn (€6.3bn) purchase of British grocer Morrison Supermarkets or it will face an in-depth probe from the UK’s competition watchdog.

Britain’s Competition and Markets Authority (CMA) said the deal could lead to higher fuel prices in 121 locations where both firms own forecourts, according to a statement.

CD&R have five working days to offer proposals, it said. The regulator then has a further five days to accept the offer to refer the deal to an in-depth investigation.

“Prices for petrol and diesel have recently hit record highs, which makes it even more important that we don’t allow a lack of competition at the pump to make the situation worse,” Colin Raftery, senior director of mergers at the CMA, said.

“CD&R looks forward to continuing to work constructively with the CMA,” the firm said. A spokesperson for Morrison declined to comment.

CD&R won a rare auction for the supermarket in an intense battle against private equity rival Fortress Investment Group last year. The deal is one of Britain’s biggest-ever takeover private deals.

This is not the first time the CMA has raised concerns about gas price competitiveness in the UK supermarket sector. 

When Walmart sold a majority stake in Asda to the Issa brothers and TDR Capital, the antitrust regulator identified 36 locations where it was worried that fuel prices could rise. The sale only went through after the consortium agreed to sell 27 petrol stations.

- Bloomberg