William Morrison Supermarkets Limited's purchase of convenience retailer McColl Retail Group PLC looks set to be cleared after the UK competition regulator said it was likely to accept an offer to sell 28 stores.
Morrisons bought the 1,100 store McColl's for a reported £190mln in May after it collapsed into administration.
However, the Competition and Markets Authority (CMA) launched an investigation into the deal in July.
Following an initial probe, the watchdog found the deal would not harm the vast majority of UK shoppers or other businesses, but that it did raise competition concerns in 35 areas.
To address these concerns, Morrisons offered to divest 28 McColl's stores and the CMA said on Monday that it was minded to accept the proposals which it said appear to be suitable to restore the loss of competition.
The CMA added that it is now consulting on the proposals – known as undertakings – for the sale of these stores. If the CMA accepts the proposals, the deal would be cleared to proceed.
In a statement, Sorcha O’Carroll, CMA Senior Director of Mergers, said: "Our preliminary view is that the sale of these stores will preserve competition in these local areas and prevent consumers from losing out due to this deal, at a time when shoppers are already facing rising prices.
"If, after reviewing the responses to our consultation, we conclude that the competition issues have been addressed, the deal will be cleared."
The 500-store Morrisons chain has been owned by private equity firm Clayton, Dubilier & Rice (CD&R) for a year. CD&R is also the parent company of the Motor Fuel Group, which owns more than 800 convenience stores.
Morrisons recently lost its place as Britain's fourth largest grocer to German discounter Aldi.