Morrisons takeover risks higher fuel prices, finds competition watchdog probe

Competition chiefs have warned the takeover of Morrisons by Clayton Dubilier & Rice could lead to higher prices at the UK’s petrol pumps.

The Competition & Markets Authority said it had identified 121 locations across the country where both companies owned forecourts, which were the centre of concern.

CD&R, owner of the Motor Fuel Group – the largest independent operator of petrol stations in the UK – now has five days to offer concessions to the CMA.

The announcement of the investigation’s findings comes with concern over fuel prices at the centre of national attention, despite the Chancellor’s reduction in fuel duty in yesterday’s Spring Statement.

Experts told The Grocer in January when the authority launched its probe that they believed the consortium would have to dispose of dozens of forecourts, but predicted the supermarket’s new owners would have anticipated the move after its £7.1bn takeover and would have been making plans.

MFG operates 921 petrol stations across England, Scotland and Wales under brands including Esso, BP, Shell, Texaco, Jet and Murco. Morrisons operates 339 petrol stations, the vast majority at its supermarkets across the UK.

Following its Phase 1 investigation, the CMA said the 121 local areas across England, Scotland and Wales would face only limited competition after the merger, meaning that the deal could lead to an increase in prices.

“Prices for petrol and diesel have recently hit record highs, which makes it even more important that we don’t allow a lack of competition at the pump to make the situation worse,” said Colin Raftery, senior director of mergers at the CMA.

“We’re concerned that this deal could lead to higher prices for motorists in some parts of the country. 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.”

CD&R has five working days to offer proposals to the CMA to address the competition concerns identified. The CMA would then have a further five working days to consider whether to accept these in principle instead of referring the case to a Phase 2 investigation. 

A CD&R spokeswoman said: “We note the CMA’s statement and will be responding accordingly. CD&R looks forward to continuing to work constructively with the CMA.”