The Competition and Markets Authority has warned of potentially higher petrol prices following the Issa brothers’ £6.8bn acquisition of supermarket chain Asda.
The CMA, which launched a phase 1 probe into the deal in December, has flagged local competition concerns in relation to the supply of road fuel in 36 areas across the UK, and the supply of auto-LPG in one other area.
Mohsin and Zuber Issa acquired Asda with private equity firm TDR Capital through the jointly-owned vehicle Bellis. But the brothers and TDR also own EG Group, which operates 395 petrol stations in the UK. Asda operates 323 petrol stations.
Joel Bamford, senior director of mergers at the CMA, said: “Our job is to protect consumers by making sure there continues to be strong competition between petrol stations, which leads to lower prices at the pump.
“Right now, we’re concerned that the merger could lead to higher prices for motorists in certain parts of the UK.”
However, Bamford added that should Bellis provide a “clear-cut solution” to address the CMA’s concerns, a more in-depth phase 2 investigation would be avoided.
Bellis has five working days to address the concerns, after which the CMA will have a further five working days to consider whether or not to accept any proposed remedies.
The sale of Asda, announced last autumn, is the biggest British leveraged buyout in more than a decade. The billionaire brothers, who have more than 6,000 petrol stations in 10 countries, and TDR have equal shareholdings in Asda. Former owner Walmart, the US retail giant, has retained a minority stake.
