In January, the Competition and Markets Authority (CMA) opened its investigation into Clayton, Dubilier & Rice Holdings LLC's (CD&R) £7bn purchase of Wm Morrisons Supermarkets Ltd.
CD&R is the owner of the Motor Fuel Group (MFG), the largest independent operator of petrol stations in the United Kingdom, with 921 sites, while Morrisons, which is predominantly a groceries retailer, operates 339 petrol stations across England, Scotland and Wales. The CMA's Phase 1 investigation focused on local areas where both businesses operated petrol stations.
Following its Phase 1 investigation, the CMA found that the deal raises competition concerns in relation to the supply of petrol and diesel road fuel in 121 local areas across England, Scotland and Wales - so could lead to higher prices for motorists in these locations.
In order to address these concerns, CD&R has now offered to divest 87 of MFG's petrol stations to a purchaser or purchasers to be approved by the CMA.
The CMA is minded to accept these proposals, which appear to be suitable to restore the loss of competition brought about by the deal across each of the 121 local areas in which the concerns were identified. While the number of petrol stations CD&R is proposing to sell is lower than the number of areas in which concerns were identified, the sale of some petrol stations would address the concerns in multiple areas.
The CMA is now consulting on the proposals - known as undertakings - for the sale of these petrol stations. If the CMA accepts the proposals, the deal would be cleared to proceed.
Colin Raftery, Senior Director of Mergers, at the CMA, said:
The sale of these petrol stations will preserve competition and prevent motorists from losing out due to this deal, which is particularly important when prices have recently hit record highs.
If we conclude that the competition issues have been addressed following a consultation on CD&R's offer, the deal will be cleared.
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