The Competition and Markets Authority (CMA) has begun gathering views on the proposed acquisition of Southern Co-operative by Co-op Group, marking the latest step in a merger that would create one of the UK's largest co-operative retail businesses.
The competition watchdog announced on Thursday (4 June) that it is inviting comments from interested parties on any competition issues that could arise from the transaction. The consultation period will run until 18 June.
The CMA said it has not yet launched a formal Phase 1 investigation and that the invitation to comment forms part of its initial information-gathering process. The regulator added that it has received the necessary information from the parties to commence pre-notification discussions.
The development follows Southern Co-op members' approval of the merger in a second ballot held in May. More than 16,000 members took part in the vote, with the society describing the outcome as a clear mandate to proceed with the transaction.
The second ballot was required under legislation governing transfer engagements between co-operative societies and came after members overwhelmingly backed the proposal at a Special General Meeting on 6 May, when more than 97 per cent voted in favour.
If approved, the deal would combine Southern Co-op's network of more than 300 food stores, funeral branches and Starbucks outlets with Co-op Group's operations, which include more than 2,300 food stores, funeral services, wholesale, insurance and legal businesses.
Southern Co-op has argued that joining forces with Co-op Group would help secure the long-term future of the society after a challenging trading period. The retailer has reported losses for three consecutive years and previously warned that it expected operating losses to exceed £20 million in the current financial year.
Both organisations have said the combination would create a larger and more resilient co-operative business while preserving co-operative values, member ownership and community investment.
Southern Co-op has said its stores and funeral homes will continue to operate as normal during the transition process, with members retaining access to their existing membership benefits.
The businesses had previously indicated that, subject to regulatory approvals, the transaction could complete by the end of July.