Asda takeover 'could lead to higher petrol prices' warns competition regulator

The bumper £6.8 billion takeover of Asda by forecourt tycoons the Issa brothers and private equity firm TDR Capital could lead to higher petrol prices for motorists in certain areas, the UK competition watchdog has warned.

The Competition and Markets Authority (CMA) said that investigations have raised “local competition concerns in relation to the supply of road fuel in 36 areas across the UK”.

EG Group the forecourt business owned by Mohsin and Zuber Issa, operates 395 petrol stations, while Asda runs 323 sites.

In October, EG Group and private equity backer TDR Capital agreed a deal to take control of the supermarket chain from US retail giant Walmart.

Asda is one of the 'big four' supermarket chains, operating across Scotland and the UK. It runs 323 forecourt sites. Picture: Rui Vieira/PA Wire

Two months later, the CMA formally launched an initial phase one probe into the deal to consider whether the tie-up would result in a “substantial lessening of competition”.

It said that it has now found competition issues at the 36 locations as well as one other area, where it has specific concerns regarding the supply of a type of fuel called auto-LPG.

The buyers now have five working days to offer a solution to address these competition concerns. The CMA will then have a further five days to consider whether it will accept these terms or call for a more thorough investigation.

Blackburn-based EG Group, formerly known as Euro Garages, already runs forecourt convenience stores for Spar.

A spokeswoman for the Issa brothers and TDR Capital said: “We will be working constructively with the CMA over the course of the next ten 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.”

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.”

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