British variety store chain Poundland has received formal clearance from the UK’s Competition and Markets Authority (CMA) to acquire rival chain 99p Stores.
Confirming its provisional findings, published in August, the CMS announced on Friday that it has concluded the merger may not be expected to result in a substantial lessening of competition. Consequently, the merger will not result in customers facing a reduction in choice, value or quality of service.
Poundland Group plc (Poundland) and 99p Stores Limited (99p Stores) offer general merchandise such as groceries, stationery, homeware, gardening and seasonal merchandise. In comparison to other retailers, the companies sell most of their products at a single price point.
The CMA found that the companies are each other’s closest competitors, along with rival chain Poundworld. But following completion of the merger, Poundland and 99p Stores will continue to face competition from other value retailers such as B&M, Home Bargains, Wilko and Bargain Buys, as well as supermarket chains like Tesco and Asda. CMA’s inquiry group’s assessment found that Poundland would not have an incentive to reduce the quality of its offering, either at the local or at the national level.
Poundland stated that it welcomes this decision and will now move to complete the acquisition of 99p Stores by the end of September, adding that it will provide further information on its plans for 99p Stores in conjunction with the publication of its interim results on 19 November 2015.
Chief executive of Poundland, Jim McCarthy, said:
“We welcome the CMA’s decision to clear the merger. We believe that the acquisition of 99p Stores will be great for both customers and for shareholders and we will now move to completion by the end of the month.”
The CMA is the UK’s primary competition and consumer authority. It is an independent non-ministerial government department with responsibility for carrying out investigations into mergers, markets and the regulated industries, as well as enforcing competition and certain aspects of consumer law. Panel members at the CMA are from a various backgrounds, such as economics, law, accountancy and business. Membership of an inquiry group usually reflects a mix of expertise and experience, including industry experience.