CMA consults on Co-op store sales to clear Southern deal

The Competition and Markets Authority is consulting on a divestment packageGOV that would let Co-operative Group Limited keep the rest of its completed acquisition of The Southern Co-operative Limited without a phase 2 investigationPublishing. The consultation on proposed undertakings in lieu of a referenceGOV, opened 12 October 2026GOV, runs to 27 October 2026Publishing; representations go to the principal case officer by email.

The merger took effect on 26 July 2026Publishing by statutory transfer of engagements, with Southern's business moving to Siena Co-operative Limited, a newly incorporated CGL subsidiary. On 15 September 2026 the CMA decided under section 22(1) of the Enterprise Act 2002 that the merger constitutes a relevant merger situationPublishing that has resulted or may be expected to result in a substantial lessening of competitionGOV: horizontal unilateral effects in the retail supply of groceries in convenience storesPublishing in local areas centring around nine CGL stores and ten Southern storesPublishing, and in attended at-need and pre-paid funeral services in two local areasPublishing. CGL offered undertakings in lieu on 22 SeptemberPublishing; on 29 September the CMA gave notice under section 73A(2)(b)Publishing that there are reasonable grounds for believing the offer, or a modified version, might be acceptedPublishing.

The proposed undertakings require CGL to divest 15 convenience storesPublishing — 13 SouthernPublishing and two CGL sitesPublishing listed in Annex 2 to the consultation notice — across the grocery SLC areasPublishing, so that either the overlap is removed or fascia are restored to pre-merger levelsPublishing, plus two Southern funeral homes covering the two funeral SLC areas (the Alton centroid site and the larger JB Hall site at Earley). Each divestment includes the leasehold or freehold propertyPublishing, transferring employees and store assets and contracts, but excludes supply and customer contracts, leased assets, intellectual property and back-office supportPublishing. A fall-back mechanism applies if sites prove hard to sell. The CMA's provisional view is that the grocery divestiture resolves each SLC in a clear-cut manner and is readily implementable — competitor grocers have shown initial interest, so no up-front buyer approval is required — and that the funeral divestiture is likewise clear-cut and effective.

The undertakings impose the standard divestiture machinery: sale as a going concern within a CMA-set divestment period to CMA-approved purchasers who are independent, resourced and raise no fresh competition concernsPublishing; a trustee with an irrevocable mandate to sell at no minimum price if CGL defaultsPublishing; pending completion the undertakings would require CGL to keep the divestment business separate and maintained as a going concern — preserving its brand identity, assets, staffing, IT separation and supplier arrangements — with material developments reported to the CMA; and a ten-year ban on CGL reacquiring interests in the divested businessPublishing. Breach is enforceable by the CMA and actionable by anyone suffering loss under section 94. The initial enforcement order of 23 July 2026 lapses on acceptance. The case page also published derogations of 6 and 8 October 2026.

Legal basis: Enterprise Act 2002 ss.22, 72, 73 and Schedule 10; CMA consultation notice ME/7150/26 and proposed undertakings of 12 October 2026GOV.