POUNDLAND’S offer to buy rival 99p Stores for £55m is facing an in-depth investigation by the competition watchdog, amid concerns reduced competition will lead to fewer promotions and store closures.
The Competition and Markets Authority (CMA) warned that it could launch a 24-week in-depth probe unless Poundland “offers acceptable undertakings to address the CMA’s competition concerns in a clear-cut manner”.
The watchdog identified 80 areas where it believes there is “a realistic prospect of less competition” – and an additional 12 where they will be competitors in the future.
If the deal goes through, it will leave the new group with just one main competitor, Poundworld, alongside other discount retailers such as B&M, Home Bargains, Wilko and Poundstretcher.
Sheldon Mills, senior director of mergers at the CMA and decision-maker in this case, said: “After the transaction, Poundland will no longer face competition from its closest rival, and following our initial investigation, it is unclear whether the constraint posed by remaining retailers is sufficiently strong to mitigate our concerns over how the transaction might affect choice, value and service for shoppers.”