(Sharecast News) - The Competition and Markets Authority said on Thursday that Morrisons' takeover of convenience store retailer McColl's could lead to higher prices.
Following a phase 1 investigation, the watchdog said the merger raises competition concerns in 35 areas, where McColl's or MFG convenience stores will face reduced competition if the deal is allowed to go ahead as planned.
"Weaker competition could lead to higher prices or a lower quality service for the customers in these areas who rely on their local shops for groceries," it said.
The CMA said the retailers have conceded the merger would raise concerns in some areas and asked the watchdog to move straight to a discussion of remedies.
Morrisons now has five working days to offer proposals to the CMA to address the competition concerns identified.
Sorcha O'Carroll, CMA senior director of mergers, said: "As the cost-of-living soars, it's particularly important that shops are facing proper competition so that customers get the best prices possible when picking up essentials or doing the weekly shop.
"While the vast majority of shoppers and other businesses won't lose out, we're concerned that the deal could lead to higher prices for people in some areas. If Morrisons and McColl's can address these concerns, then we won't need to move on to an in-depth investigation.
"In the meantime, we're working closely with Morrisons to ensure that it can provide the support that McColl's needs to continue to operate during our investigation."
Mccoll's (MCLS)