LONDON -U.S. private equity firm Clayton, Dubilier & Rice (CD&R) must address the competition regulator’s concerns that its purchase of the Morrisons supermarket chain could lead to higher fuel prices to avoid an in-depth investigation into the deal.
CD&R is the owner of the Motor Fuel Group (MFG), which is the United Kingdom’s largest independent operator of petrol stations, with 921 to Morrisons’ 339.
The Competition and Markets Authority (CMA) on Thursday said that its Phase 1 investigation found that the deal raises competition concerns in 121 areas in the UK where both MFG and Morrisons have petrol forecourts.
“We’re concerned that this deal could lead to higher prices for motorists in some parts of the country,” said Colin Raftery, senior director of mergers at the CMA.
“But if CD&R and Morrisons are able to address these concerns, then we won’t need to move on to an in-depth investigation of the merger.”
The CMA has given CD&R five working days to offer proposals to address the identified concerns. Those proposals are likely to be forecourt disposals.
The regulator then has a further five working days to consider whether to accept these in principle rather than refer the case for a Phase 2 investigation.
CD&R completed its 7 billion pound ($9.2 billion) purchase of Morrisons last October, but the supermarket chain has had to continue operating as a separate business while the CMA conducts its investigations.
($1 = 0.7593 pounds)