Supermarket petrol station merger could increase prices for motorists

CMA investigation finds Asda’s purchase of 132 petrol stations and attached grocery stores from the Co-op could mean higher prices or less choice for motorists or shoppers in 13 areas.

In January 2023, the Competition and Markets Authority (CMA) opened a Phase 1 investigation into the completed acquisition by Asda of Arthur Foodstores Limited, a company set up by Co-op to sell its 132 petrol forecourt sites.

The CMA’s investigation focused on a number of local areas in which Asda and the Co-op sites that it acquired compete to provide fuel or groceries to customers. The CMA found that the deal raises competition concerns in 13 locations across the UK, in each of which the merging businesses currently compete for customers and would not face sufficient competition after the merger. The deal could therefore lead to consumers and businesses in these areas facing higher prices or lower quality services when shopping or buying fuel.

Asda told the CMA that competition concerns would not arise in these areas because the merger would enable Asda to bring its low-cost pricing model to more customers. But as the CMA’s investigation in this case focussed on local areas in which the merging businesses currently compete for customers, competition concerns only arise in areas in which Asda is already an important option for customers, who already have access to Asda prices. The CMA found that allowing Asda to acquire more sites in those areas, leaving it facing insufficient competition in future, could therefore risk worse outcomes for customers.

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 now has 5 working days to offer legally binding proposals to the CMA to address the competition concerns identified. The CMA would then have a further 5 working days to consider whether these proposals address its concerns, or if the case should be referred to an in-depth, Phase 2 investigation.