Yahoo Finance Morrisons' takeover of McColls faces UK competition watchdog probe
Britain's Competition and Markets Authority (CMA) has announced an investigation into supermarket Morrisons’ takeover of McColl’s, the struggling retailer.
The CMA said on Monday that it launched the probe amid competition concerns.
The regulator has issued an initial enforcement order, forcing both Morrisons and McColls to continue to compete as they did before while investigators carry out their work.
It did not reveal when the decision will be announced, but it has the power to force Morrisons, owned by US private equity firm Clayton, to sell off stores in certain areas if it finds the takeover could lead to higher prices for shoppers.
A CMA spokesperson 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."
Read more: How much has the cost of a basket of groceries risen?
Earlier this month, Morrisons was named as McColl’s buyer after the convenience-store retailer fell into insolvency.
The supermarket giant beat a bid from the Issa brothers, the billionaire owners of rival Asda and private equity group TDR Capital.
Embattled McColls had collapsed into administration at the start of May, putting 16,000 jobs at risk after it was hit by supply chain issues and rising inflation.
McColl’s, which already has close commercial ties with Morrisons, operates over 1,200 corner stores and newsagents across the country under the McColl’s, RS McColl and Morrisons Daily brands.
Read more: McColl's collapses into administration with 16,000 jobs at risk
The London-listed firm has a debt pile of around £170m ($215m), and its shares on the London Stock Exchange (LSEG.L) were also suspended before it was reversed.
McColl’s was valued at about £200m when it first floated in 2014, but has struggled to compete with larger competitors such as Tesco (TSCO.L), J Sainsbury (SBRY.L) and Co-op.
