The Competition and Markets Authority's (CMA) investigation into the Co-op-Nisa deal has began and experts say it is "difficult to predict" whether the companies will get the quick solution they are hoping for.
The investigation was expected by Nisa and the Co-op and will examine whether the deal is likely to reduce competition and choice for shoppers and retailers supplied by Nisa or the Co-op.
“If the CMA identifies a potential reduction in competition, it will be referred for an in-depth [Phase two] investigation lasting up to 24 weeks," a CMA spokesperson said.
The spokesperson added that the phase two investigation could be avoided if the Co-op proposed quick fixes to competition issues.
Both retailers are hoping to avoid an in-depth investigation, with a source within Nisa previously telling Retail Express that they expected the deal to go through by the end of March.
Walker Morris senior associate and contracts lawyer, and former CMA principle case officer Richard Butterworth said: "It is difficult to predict whether the CMA would go to phase two in this case. Much will depend on the level of overlaps between Nisa and the Co-op on a local level and whether other customers, suppliers or competitors will complain about the merger to the CMA."
He added that if problems arise the Co-op could be forced to sell off stores to get the deal through quickly, as it was forced to do when it bought My Local stores last year.
During a CMA investigation, parties are banned from taking any action that could prejudice or impede the investigation, this includes any move seen as intergrating the two businesses before the deal is approved.
Costcutter is currently supplied by Nisa but is due to be supplied by the Co-op from April onwards. However, Costcutter CEO Darcy Willson-Rymer said the details of the supply deal would depend on the CMA’s decision on the Nisa-Co-op investigation.
Parfetts-owned symbol group Go Local Extra is also supplied with fresh lines by Nisa.
Asked to comment on the previously stated spring deadline, a Co-op spokesperson told Retail Express: “We’re in a process where CMA is reviewing the deal and we’re waiting to hear the outcome, so we’re limited in what we can say at present. We remain grateful for the patience of all the retailers who are also waiting to hear if the deal is approved.”
Nisa refused to comment.
The CMA will receive comments on the deal until 9 March before making an initial decision on or before 23 April.