Co-op Given Green Light For Somerfield Acquisition

Tue, 21 Oct 2008
 
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The Co-operative Group's £1.5 billion takeover of supermarket chain Somerfield has been approved by the Office of Fair Trading (OFT).

With projected annual sales of around £8bn and a market share of around 8 per cent, the acquisition will cement The Co-op’s place as the UK’s fifth-largest supermarket chain.

The UK watchdog said no competition issues were found at a national level but stipulated that The Co-op will have to offload at least 126 stores to address competition concerns in local grocery markets .

The Co-operative Group has offered a divestment package to meet each of the OFT's local competition concerns.

OFT chief executive John Fingleton said: "Once finalised, the divestment package will directly safeguard the welfare of many thousands if not millions of UK consumers by restoring grocery competition in the 126 local areas affected, while allowing an otherwise likely pro-competitive merger to go ahead."

The Co-operative Group said in a statement: "The Co-operative and Somerfield welcome this afternoon's announcement by the OFT, which, subject to us addressing a small number of local competition issues, clears the way for the creation of a stronger fifth player in the grocery market ."

"This is good news for consumers and good for competition."

Some 40,000 consumers were interviewed in the research, a record for any merger case. The store disposal package is also due to set records, as it looks set to be the biggest ever in UK competition and merger history.

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