Britain's Competition and Markets Authority (CMA) has launched a formal antitrust investigation into supermarket Morrisons’ takeover of struggling convenience retailer McColl’s.
The regulator has started a merger inquiry into the deal to see whether it would result in a lessening of competition in the UK groceries market, it said in a statement on Wednesday.
It confirmed it will launch a formal phase one probe – the initial stage of its merger review process – and has invited comments on the move by interested parties.
It said the probe will consider "whether the creation of that situation may be expected to result in a substantial lessening of competition within any market or markets in the United Kingdom for goods or services".
In May, it issued an initial enforcement order to check whether the transaction needed to be probed.
At the time, Morrisons and McColl’s were ordered to continue operating as separate entities until investigators carried out their work.
The CMA will make a decision by 8 September on whether the deal then needs an in-depth investigation.
Morrisons snapped up McColl’s from insolvency in a £190m rescue deal in May after the retailer battled soaring costs due to supply chain disruption, inflation and its large debt burden.
The Bradford-based supermarket chain held off competition from rivals including forecourt giant EG Group to strike the deal.
Under the terms, the UK's fourth-largest supermarket said it would acquire all 1,160 McColl's stores, which would continue to operate as normal, protecting 16,000 jobs.
It comes a month after the competition watchdog cleared Morrisons’ owner’s £7bn takeover by US private equity firm Clayton, Dubilier & Rice (CD&R).
The CMA had raised concerns over the deal’s potential impact on the petrol market, as CD&R also owns Motor Fuel Group (MFG), the UK’s largest independent petrol station operator.
But the deal was approved after CD&R agreed to 87 of its forecourts in order to allay competition concerns.
Morrisons did not replied to a request for comment from Yahoo Finance UK at the time of writing.
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