29 July, 2008 - The UK's takeover watchdog has announced it is to review the acquisition of supermarket chain Somerfield Ltd by the Co-operative Group in a deal that was worth over GBP1.5 billion.
The Office of Fair Trading (OFT) said today it will decide whether the buyout could lead to a “substantial lessening of competition within any market or markets in the U.K. for goods or services that warrants reference to the Competition Commission for investigation and report."
It has invited interested parties from the industry to contact its officials with comments before 11 August.
The move comes just two weeks after the Co-op completed the purchase, subject to regulatory approvals, of rival Somerfield from a private equity consortium.
Co-op chief Peter Marks was quoted as saying he expected some local competition issues but was confidant of working with the OFT to solve any problems - which could involve selling stores to competitors such as Tesco.
He was reported as saying he hoped the deal would be tied up within the next few months.
The Co-op is the UK’s fifth largest retail chain employing 85,000 people. The deal, which will see the company incorporate Somerfield’s 880 stores, will boost its total number of outlets to 3,000 and is forecast to generate annual sales of approximately GBP8 billion.