The Competition and Markets Authority (CMA) has raised competition concerns over the Issa brothers taking over Asda petrol forecourts – but has also opened the door to rubber-stamping the deal.
The competition watchdog said on Tuesday it was concerned about increased fuel prices for consumers in 37 areas of the UK if the deal for Asda and its petrol stations struck by the Issa brothers and TDR Capital goes through in its current state.
The CMA said the concerns stemmed from overlaps between the brothers’ sprawling forecourts business - EG Group’s 395-strong petrol station estate - and Asda’s portfolio of 323 stations.
The watchdog has given the Issa brothers and TDR Capital, who acquired the 323 Asda forecourts through a jointly-owned company called Bellis as part of the wider £6.8bn deal for the grocery business, five business days to put forward proposals to address its concerns.
Should the proposals adequately address those concerns, the CMA said it wouldn’t need to escalate its current phase one inquiry to a phase two investigation – in effect setting the scene for it to wave the deal through.
CMA senior director of mergers, Joel Bamford, said: “Our job is to protect consumers by making sure there continues to be strong competition between petrol stations, which leads to lower prices at the pump. These are two key players in the market, and it’s important that we thoroughly analyse the deal to make sure that people don’t end up paying over the odds.
“Right now, we’re concerned the merger could lead to higher prices for motorists in certain parts of the UK. However, if the companies can provide a clear-cut solution to address our concerns, we won’t carry out an in-depth Phase 2 investigation.
A spokesman for the Issa brothers and TDR Capital said: “We will be working constructively with the CMA over the course of the next 10 days in order to arrive at a satisfactory outcome for all parties within Phase 1. This would provide welcome certainty for our colleagues, suppliers and customers, and allow us to move forward with our exciting plans for investment and growth at Asda.”
Asda could benefit from massive investment
The Issa brothers struck a deal with Asda’s former parent Walmart in October 2020 to acquire a majority share in the grocer for £6.8bn. The CMA announced a probe into the proposed merger in December of that year, after the deal was flagged by the European Commission.
EG Group currently operates more than 6,000 sites across 10 global markets. Should the deal go through, the Issa brothers plan to plough £1bn into Asda during the first three years of ownership, with a focus on lowering prices and shoring up its supply chain.
It is already trialling a new convenience fascia, Asda on the Move, at a clutch of EG’s petrol station forecourts – a format that is likely to be rolled out further if the acquisition is approved.
No comments yet