Asda takeover could lead to rise in fuel prices

Competition watchdog issues warning as filling station giant buys supermarket chain

Wednesday, 21st April 2021, 12:00 pm
Updated Wednesday, 21st April 2021, 2:29 pm

Asda’s takeover by a major petrol station operator could lead to higher fuel prices for drivers in some parts of the country, the UK’s competition watchdog has warned.

The Competition and Markets Authority (CMA) has said that the £6.8 billion buyout of the supermarket chain by EG Group could reduce competition in 36 areas across the UK, with the potential to push up prices at the pumps.

EG Group agreed to buy the Asda chain from US operator Walmart in October 2020 and in December the CMA launched an initial probe into whether the sale would lead to a "substantial lessening of competition".

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Asda has more than 300 filling stations around the UK

EG Group owns 395 filling stations around the UK while Asda owns 323 sites. The CMA said it had found “competition issues” at 36 locations, along with specific concerns regarding the supply of LPG at one other site.

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.

"These are two key players in the market, and it's important that we thoroughly analyse the deal to make sure that people don't end up paying over the odds.

"Right now, we're concerned the merger could lead to higher prices for motorists in certain parts of the UK.

"However, if the companies can provide a clear-cut solution to address our concerns, we won't carry out an in-depth phase two investigation."

Following the CMA’s initial findings, EG Group has five days in which to offer a solution to the concerns and the CMA has a further five days to consider whether the terms are acceptable. If it doesn’t agree with the solution it can order a more thorough investigation.

A spokeswoman for the Issa brothers, who own EG Group, and TDR Capital, which helped finance the deal, said: "We will be working constructively with the CMA over the course of the next 10 days in order to arrive at a satisfactory outcome for all parties within phase one.

"This would provide welcome certainty for our colleagues, suppliers and customers, and allow us to move forward with our exciting plans for investment and growth at Asda."