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OFT accepts CGL undertakings instead of reference to the Competition Commission

153/07    5 November 2007

The OFT has decided today to accept the undertakings offered by Co-operative Group (CWS) Limited (CGL) as they address the competition concerns arising from the completed merger between CGL and United Co-operatives Ltd (United). This transaction will not be referred to the Competition Commission.

CGL and United completed their merger on 29 July when they amalgamated their respective societies by a transfer of engagements between the two co-operative societies under section 51(1) of the Industrial and Provident Societies Act. In lieu of reference to the Competition Commission, CGL has offered to make divestments of 24 outlets in relation to 15 local areas. The OFT considers that the proposed undertakings will clearly address the competition concerns identified in these areas in its decision of 23 July 2007.

Simon Pritchard, Senior Director of Mergers, OFT, said:

'This efficient resolution of our competition concerns marks the first time the OFT has reached a remedies settlement in respect of multiple industry sectors - the retail supply of groceries, pharmacy services, and funeral services - in the same merger inquiry. We are now confident that, once implemented, the agreed package of Co-op divestments will restore competition and consumer choice in the relevant local markets across the UK.'
 
NOTES

1. The Reference Test - the OFT has a duty to make a reference to the CC if the OFT believes that it is or may be the case that arrangements are in progress or in contemplation which, if carried into effect, will result in the creation of a relevant merger situation; and the creation of that situation may be expected to result in a substantial lessening of competition within any market or markets in the United Kingdom for goods or services.

2. The decision made on 23 July found that the parties overlapped in the supply of property investment, financial services, travel agency services, pharmacy, funeral and grocery services. The original decision can be found in the mergers section.

3. Under the Enterprise Act 2002 a relevant merger situation is created if two or more enterprises have ceased to be distinct enterprises; and the value of the turnover in the United Kingdom of the enterprise being taken over exceeds £70 million; or as a result of the transaction, in relation to the supply of goods or services of any description, a 25 per cent share of supply in the UK (or a substantial part thereof) is created or enhanced.

4. Under section 73 of the Enterprise Act 2002 the OFT may, instead of making a reference, and for the purpose of remedying, mitigating or preventing the substantial lessening of competition concerned, or any adverse effect which has or may have resulted from it or may be expected to result from it, accept from such of the parties concerned as it considers appropriate undertakings to take such action as it considers appropriate. In doing so, the OFT will have regard to the need to achieve as comprehensive a solution as is reasonable and practicable to the substantial lessening of competition and any adverse effects resulting from it.

5. Before accepting any such undertakings the OFT shall give notice of the proposed undertakings under Schedule 10 of the Enterprise Act 2002, and considered any representations made in accordance with that notice.

6. The full text of this decision will appear in the mergers section.

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