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OFT accepts divestments in Lothian and Angus Co-op merger

57/09    14 May 2009

The OFT has accepted undertakings offered by Co-operative Group Limited (Co-op) to address the competition concerns arising from its merger with Lothian Borders & Angus Co-operative Society Limited (LBA).

Under the terms of the undertakings, the Co-op will divest grocery stores in 12 local areas in Scotland, as well as a pharmacy in one of those areas.

Amelia Fletcher, Senior Director of Mergers, said:

'We are content that the pharmacy and grocery divestments offered by Co-op will, when implemented, restore competition and consumer choice in the areas of concern identified by the OFT earlier this year.'

As a result of these undertakings, the merger will not be referred to the Competition Commission.

NOTES

1. LBA is an independent co-operative society trading across many parts of Scotland. Its primary business is food retailing, although it also provides pharmacy, funeral and services such as petrol stations.

2. See the undertakings on the OFT's register of undertakings in lieu of a reference.

3. The Reference Test - the OFT has a duty to make a reference to the Competition Commission if the OFT believes that it is or may be the case that a relevant merger situation has been created, and the creation of that situation has resulted or may be expected to result in a substantial lessening of competition within any market or markets in the United Kingdom for goods or services.

4. Under the Enterprise Act 2002 a relevant merger situation is created if two or more enterprises have ceased to be distinct enterprises; and the value of the turnover in the United Kingdom of the enterprise being taken over exceeds £70 million, or as a result of the transaction, in relation to the supply of goods or services of any description, a 25 per cent share of supply in the UK (or a substantial part thereof) is created or enhanced.

5. Undertakings in lieu of reference - under section 73 of the Enterprise Act 2002 the OFT may, instead of making a reference to the Competition Commission, and for the purpose of remedying, mitigating or preventing the substantial lessening of competition concerned, or any adverse effect which has or may have resulted from it or may be expected to result from it, accept from such of the parties concerned as it considers appropriate undertakings to take such action as it considers appropriate.

6. The full text of this decision will appear in the mergers section at a later date.

7. The OFT has accepted superseded undertakings in lieu of a reference in relation to The Co-operative Group Limited/Somerfield Limited merger, the original undertakings for which the OFT accepted on 15 January 2009. This was in order to give the Co-op a choice of which grocery stores to sell in those five local areas listed in the Somerfield undertakings in which a former Somerfield store overlapped with a LBA store (which is now a Co-op store).

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