Regulators have provisionally green-lit the takeover of Southern Co-operative by the Co-operative Group.
The Competition and Markets Authority said earlier this month that the deal, agreed in April, could reduce competition in some markets following a phase 1 investigation.
Now the CMA has proposed to accept a remedies package since offered by the Co-Op Group to address these competition concerns.
Southern Co-operative, based in Portsmouth, operates convenience stores – branded Food and Welcome – in the South of England including the counties of Hampshire and Dorset.
Founded in 1873, it has 300,000 members and 300 food, funeral and Starbucks coffee branches, including three crematoriums. However its profits have declined in the last three years.
Co-operative Group, which has seven million members, operates more than 2,500 stores – including many in the same regional markets as Southern Co-operative.
The remedies include the sale of 15 convenience stores and two funeral homes.
“During the investigation, both businesses accepted that the deal raised the above competition concerns and asked to fast track the investigation so they would offer undertakings to address these concerns. Since then, the businesses have engaged constructively with the CMA on finding effective possible remedies,” stated the CMA.
“Having provisionally found that the proposed sales in each local area put forward by the businesses could address the CMA’s concerns, the CMA will now proceed to consider them in more detail, including seeking third-party feedback and then considering potential buyers.”
Joel Bamford, executive director for mergers at the CMA, added: “Having reviewed these proposals, we provisionally believe they could resolve our concerns and allow us to clear the deal while protecting competition for the benefit of people in these local communities.”