Britain’s Competition and Markets Authority (CMA) accepted Co-operative Group Limited’s undertakings on Nov. 5, requiring 17 site sales and allowing its completed acquisition of The Southern Co-operative Limited to avoid a Phase 2 investigation.
Co-op Group must sell 15 convenience stores and two funeral sites. The CMA said the divestments are intended to protect competition for shoppers and people arranging funerals in the affected local areas.
The regulator’s initial review found competition concerns in grocery areas near nine Co-op Group stores and 10 Southern Co-op stores. The parties also conceded concerns in attended at-need and prepaid funeral services near one site operated by each business. The CMA found no realistic prospect that the combined group would harm competition by restricting rival funeral directors’ access to Southern Co-op crematoria, citing evidence that it would lack an incentive to do so.
The grocery properties include stores in Wittering, Addlestone and Bradford-on-Avon. The funeral sites are The Co-operative Funeralcare – Alton and JB Hall Funeral Directors. The businesses must be sold as operating concerns to purchasers approved by the CMA and able to run them as viable competitors.
On July 26, Southern Co-op transferred its business to Siena Co-operative Limited, a newly incorporated Co-op Group subsidiary, under a statutory transfer of engagements. Their operations remained separate while the CMA assessed the acquisition.
Co-op Group told the CMA the deal would reduce its financial and credit exposure as Southern Co-op’s principal wholesaler, given Southern’s financial position and cash-flow problems. It also said Southern’s grocery and funeral assets fit its existing operations. The CMA said the parties’ internal documents broadly supported that rationale.
Kate Allum, interim CEO of The Co-operative Group, said CMA approval gave the group “the green light to begin an exciting new chapter of co-operation.” The CMA case page listed the inquiry as open on Nov. 5 and said the full decision would be published shortly.
The undertakings took effect Nov. 5 and set a maximum of seven months to complete the sales; the CMA will determine the initial divestment period. Co-op Group also cannot reacquire an interest in the divested businesses for 10 years after their sale without the CMA’s written consent.
