Competition Issues in UK Grocery Retailing

Over the past 20 years, grocery retailing has probably been the sector most investigated by the UK competition authorities. Given that three quarters of the grocery M&A deals that have been reviewed have been cleared unconditionally, this might be taken to indicate a fairly light touch approach to the sector. However, merger review decisions have played an important role in signaling the types of deals that are likely to be acceptable. The effectiveness of this signaling system appeared to break down quite dramatically in 2018 when the CMA prohibited a merger between the UK’s second and third largest grocery retailers. Long-term trends in consumer behavior that had changed competitive dynamics in the sector, and new approaches by the CMA to assessing local market competition, had indicated that consolidation between the UK’s larger retailers might receive regulatory clearance. However, this turned out not to be the case. Any large-scale consolidation in UK grocery retailing now looks some way off.

By Andrew Taylor & Nick Warren¹

I. INTRODUCTION

Over the past 20 years, grocery retailing has probably been the sector most investigated by the UK competition authorities. Since 2003, forty-three M&A deals involving grocery retailers have been reviewed by the Competition and Markets Authority (“CMA”).² These have ranged from single store acquisitions to deals involving hundreds of supermarkets. During this time, grocery retailers have also been inv