McColls

The CMA found there was sufficient competition at both wholesale and retail level to clear the deal

The CMA has published a full explanation for clearing Henderson Group’s takeover of McColl’s five Northern Irish stores.

A phase one investigation into the acquisition began earlier this month to assess whether or not it would trigger a “substantial lessening of competition” (SLC) within the convenience market.

The CMA examined whether the loss of competition between the parties’ owned grocery stores would create an incentive to raise prices or reduce quality, it said.

It considered whether Henderson Group would worsen its retail offering at the five stores to drive customers to the other stores it supplies to increase its wholesale profits, or vice versa.

However, the CMA found there was sufficient competition at both wholesale and retail level to discourage such a move.

“On this basis, the CMA considers that the parties will not have the incentive to engage in a strategy of worsening wholesale or retail offering and the CMA therefore found that the merger will not result in a realistic prospect of an SLC,” said the CMA report.

“The CMA found that there were enough convenience and non-convenience offerings to exercise a sufficient competitive constraint on the merged entity. The CMA therefore believes that the merger will not result in a realistic prospect of a substantial lessening of competition.

“As anticipated by Henderson, the CMA cleared the completed acquisition of the five Northern Ireland-based McColl’s stores, stating that they did not believe there was a substantial lessening of competition as a result of this acquisition,” said Henderson Group chief financial officer Rob Whitten.

Henderson Retail first took over the stores, which were located in Ballymena, Bangor, Newtownabbey and Tandragee, from 20 to 24 November last year.

Henderson Group’s acquisition of the stores came after the wholesaler invested £30m in its Mallusk HQ and opened a £12.5m warehouse in September.

Henderson Group saw a 6% increase in turnover to £699.3m and a 11% rise in pre-tax profits for the year ending 31 December 2017.

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