The Competition and Markets Authority (CMA) has told the Co-op Group and Southern Co-op it could conduct a full-scale investigation of their merger.
The watchdog has told the two retail societies they need to offer an acceptable undertaking to address its concern that the merger could lead to “a substantial lessening of competition (SLC) within a market or markets in the United Kingdom”.
It said: “This merger will be referred for an in-depth, phase 2 investigation unless the parties offer an acceptable undertaking to address these competition concerns.”
After phase 1 of its investigation into the deal, the CMA said: “The merger gives rise to a realistic prospect of a substantial lessening of competition as a result of horizontal unilateral effects in the retail supply of groceries in convenience stores in local areas centring around nine Co-op Group convenience stores and 10 Southern convenience stores, and the supply of attended at-need and pre-paid funeral services in local areas centring around one Co-op Group site and one Southern site.”
It added: “The CMA found that the merger gives rise to a realistic prospect of an SLC within a market or markets in the UK.
“As a result of these concerns, the parties have until 22 September 2026 to offer undertakings in lieu which might be accepted by the CMA to address the competition concerns.”
A spokesperson for the Group said: “We are pleased that, as anticipated, the CMA hasn’t identified competition concerns at a national level.
“It has identified a small number of locations where there is both a Southern and Co-op Group presence and where they believe there may be an adverse impact on competition for consumers.
“We will continue to engage and work with the CMA on the proposed remedies.
“There are no changes for colleagues, members or customers at this stage.”
If it goes ahead, merger will see 300,000 Southern Co-op members joining the 7 million Co-op Group members as members of an enlarged Co-op Group.
Southern operates more than 300 food, funeral and Starbucks coffee branches across the south of England, with the Group operating over 2,300 food stores, 800 funeral homes and a wholesale business supplying around 8,000 outlets, as well as a leading legal services and insurance business.
Southern’s leaders have told members the deal is the best option to save the society from the likelihood of liquidation after three years of losses. In May, its members voted overwhelmingly to back the deal and a transfer of engagements was completed in July.
Both organisations continue to operate independently and separately while the regulatory process moves forward.
