Co-op's £140m takeover of Nisa cleared by competition watchdog

There are enough local alternative grocery stores to ensure people can still shop around to get the best value, CMA says

A Co-Operative Food Shop (Alamy)

The UK’s competition watchdog has cleared the Co-op’s proposed £143m takeover of member-owned groceries wholesaler Nisa.

The Competition and Markets Authority (CMA) found that the two companies do not compete head-to-head and that the deal would not result in reduced quality of service or higher prices for customers.

The CMA said it had carefully considered the impact of the deal because Nisa supplies over 4,000 groceries stores but it took into account the fact that those outlets would still be free to set their own prices and decide which products to stock after the merger.

After an initial investigation, the CMA decided not to refer the deal for an in-depth “Phase 2” probe.

There are enough local alternatives to both Co-op and Nisa-supplied stores to ensure that people can still shop around to get the best value, the CMA said.

It added that the merged company would not be able to directly determine how stores compete with each other.

Nisa-supplied stores will still be able to choose between several different wholesalers and be able to switch supplier if prices offered to them by the combined company were to increase or the quality of service go down.

Co-op swooped for Nisa in October after Sainsbury’s backed out of a purchase. Nisa’s members, who run its network of stores, voted overwhelmingly in favour of Co-op’s bid the following month.

Sheldon Mills, senior director of mergers at the CMA, said: “Millions of people throughout the UK shop at convenience stores and supermarkets, and it is vital that they continue to have enough choice to get the best value for them.

“After careful consideration, we’ve found that there is sufficient competition in both the wholesale and retail sectors to ensure that shoppers are not worse off.”

Jo Whitfield, chief executive of Co-op Retail, said she was “delighted” with the CMA’s decision.

“Our strategy is to get closer to communities and our new business will create a strong product offer and improved prices for Nisa members that will engage their shoppers across the UK,” she said.

Peter Hartley, chairman of Nisa, said: “Today’s ruling by the CMA is excellent news, and a significant step towards finalising the transaction that our members voted for last November. We are very excited about our future together which will help ensure that our members are best placed to serve their communities.”

Co-op will almost double the number of stores it supplies after it completes the deal. The company will keep the Nisa brand.