Manchester’s the Co-operative Group has been given clearance by the the Competition and Markets Authority (CMA) to go ahead with its £137m bid to takeover Scunthorpe based group, Nisa.
Nisa, which originally was an acronym for Northern Independent Supermarkets Association, was established by Dudley Ramsden and Peter Garvin in 1977 to create a buying group representing independent wholesalers.
Despite the fact that in 2007 the Nisa group ranked number 1 retailer in the UK convenience / High Street channel in a national feedback study and that Nisa supplies over 4,000 groceries stores, the CMA did not consider that the Co-op and Nisa were in direct competition.
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.”
During the course of its phase one investigation, the CMA took into account that Nisa-supplied stores would still be free to set their own prices and decide which products to stock after the merger, and so the merged company would not be able to directly determine how they compete.
The CMA said this was because there were enough local alternatives to both Co-op and Nisa-supplied stores to ensure that people could still shop around to get the best value.
The CMA added:
Furthermore, Nisa-supplied stores are able to choose between several different wholesalers and would be able to switch supplier if prices were to increase or the quality of service go down as a result of the merger with Co-op.
“This all means that the merged company would be unlikely to be able to raise prices or offer a worse service to either stores or to shoppers.”