The Competition and Markets Authority (CMA) said it found “competition concerns” in its initial investigation into Wm Morrison Supermarkets' takeover of McColl’s.
Specifically, the CMA raised concerns in 35 areas where McColl’s would compete with Motor Fuel Group, which is owned by Clayton, Dubilier and Rice, the parent company of Morrisons.
Weaker competition in those areas could lead to higher prices or lower quality service for customers who rely on their local shops for groceries, said the watchdog.
However, the deal, worth £190mln, would not harm most shoppers or businesses according to a statement from the CMA, with Morrisons taking over 1,100 McColl's convenience stores.
“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,” said Sorcha O’Carroll, CMA senior director of mergers.
“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.”
The supermarket now has five working days to put forward proposals to address concerns identified, at which point the CMA has five working days to accept or move ahead with phase 2 of the investigation.