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Asda and Co-op merger ‘could push up prices for drivers and shoppers’

Paloma Kubiak
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Paloma Kubiak

Asda’s buyout of petrol stations and attached grocery stores from Co-op could mean drivers face higher prices for fuel while shoppers could see increased costs and less choice in some areas, a regulator warns.

The Competition and Markets Authority (CMA) launched an investigation in January 2023 of the acquisition of Arthur Foodstores Ltd – a company set up by Co-op to sell its 132 petrol forecourt sites – by Asda. The deal completed in October 2022.

It revealed concerns over this merger in 13 locations across the UK where they compete for customers, suggesting the deal “could lead to consumers and businesses in these areas facing higher prices or lower quality services when shopping or buying fuel”.

The 13 areas include: Earlston in Scotland; Barnard Castle; Calcutt, Caledonian Road; Gnosall (Station Road); Lauder; Minsterley; Oakdale (Ripon Road), Harrogate; Rochester; Stonehaven (Kirkton Road); and Weycock Cross in Barry, St Columb Minor (Henver Road), and East Peckham.

However, in response, the supermarket giant told the CMA that it would bring “its low-cost pricing model to more customers”.

But the CMA said the areas highlighted are those which already have an Asda presence so “allowing Asda to acquire more sites in those areas would leave it facing insufficient competition in the future”.

It added it could “therefore risk worse outcomes for customers”.

‘Important not to make the situation worse’

Colin Raftery, CMA senior director of mergers, said: “Groceries and fuel account for a large part of most household budgets. As living costs continue to rise, it’s particularly important that deals that reduce competition among groceries and fuel suppliers don’t make the situation worse.

“While competition concerns don’t arise in relation to the vast majority of the 132 sites bought by Asda, there’s a risk that customers could face higher prices or worse services in a small number of areas where Asda would face insufficient competition in either groceries or fuel after the deal goes through.”

Asda has been given five working days to offer legally binding proposals to the CMA to address the concerns raised. The CMA will then have a further five working days to consider them or it can decide to launch a ‘phase two’ investigation – a more in-depth review of the acquisition.