Co-op could face probe over Southern Co-op deal

The Co-operative Group’s planned takeover of rival Southern Co-op could face a full-scale investigation.

The Competition and Markets Authority has warned the deal between the mutuals, which was announced in April, could “substantially” lessen competition in the sector.

The firms have until September 22 to put forward measures to resolve any potential issues.

However, if the UK’s competition watchdog doesn’t accept the proposals, it will refer the planned acquisition for a so-called phase two investigation.

A spokesperson for the Co-op Group said the Competition and Markets Authority’s concerns were focused on a “small number” of locations where there was overlap between stores owned by both brands.

If the deal goes ahead, the Co-op would add Southern Co-op’s 330,000 members to its existing seven million, as well as about 300 food, funeral and Starbucks coffeehouse sites.

A Competition and Markets Authority spokesperson said: “On the evidence currently available, this merger may be expected to result in a substantial lessening of competition within a market or markets in the UK.”

The Co-operative Group and Southern Co-op – which have not disclosed the value of the deal – are continuing to be run separately while investigations continue.

However, it is understood they hope to complete the merger towards the end of the year.

The Co-operative Group spokesperson said: “We are pleased that, as anticipated, the Competition and Markets Authority hasn’t identified competition concerns at a national level.

“It has identified a small number of locations where there is both a Southern and Co-op Group presence and where they believe there may be an adverse impact on competition for consumers.

“We will continue to engage and work with the Competition and Markets Authority on the proposed remedies.”

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