A potential merger by Asda’s owners of their petrol and supermarket divisions could be pushed back over concerns for pump prices.

A merger of the supermarket and the UK petrol forecourts business would create a retail giant worth more than £10bn

The Times reported at the weekend that the billionaire Issa brothers and TDR Capital were exploring a merger of the supermarket and the EG Group petrol forecourts business, creating a retail giant worth more than £10bn.

The combination would create a group with 581 supermarkets, 700 petrol forecourts and more than 100 convenience stores in a bid to refinance the current debt.

But the newspaper has since reported that the deal could be stalled by the Government if it meant pump prices would increase.

Following news of the plans, small business minister Kevin Hollinrake said business secretary Grant Shapps had “already raised concerns about fuel prices with the CMA and directly with retailers and we would consider very carefully anything that might undermine competitive market forces”.

The CMA is already investigating UK fuel prices amid concerns over fuel pricing and a lack of transparency. Its initial findings, published in December 2022, have already revealed evidence that drivers were hit by so-called ‘rocket and feather’ pricing on road fuel last year and that retail fuel margins had risen ahead of general inflation year-on-year over the past five years. The competitions watchdog is due to publish a further update, including options for possible next steps, in the spring.

The news of the possible Asda merger has now prompted concerns by the GMB union and the RAC over the impact to consumers.

GMB said the proposal raised “the spectre of a private equity black hole on the high street”.

Nadine Houghton, GMB national officer, added: “More and more of our essential household goods – from food to fuel – are controlled by unaccountable private equity backers. This merger isn’t in the interests of the 200,000 impacted workers, or the UK economy, or even consumes. It simply suits the debt refinancing arrangements of a private equity firm and their business partners.”

The union called for the role of the CMA to be expanded, giving greater regulatory oversight in relation to private equity buyouts and ensuring greater protection of both consumers and workers.

The RAC has warned of possible repercussions for drivers, who have already been hard hit by fuel prices over the last year.

Fuel spokesman Simon Williams said: “RAC analysis shows that while Asda remains the cheapest supermarket overall when it comes to pump prices, it is less competitive than it used to be. This is clearly demonstrated by the fact it didn’t even announce its most recent significant price cuts because they were so long overdue. If the merger were to make Asda any less competitive, this would be bad news as there would be even less incentive for other retailers to compete on price, as well as fewer better-value places to fill up.”

The RAC already warned last autumn that supermarkets were charging “excessive” margins and called on them to cut prices. While average UK fuel prices did subsequently fall, it’s since said that drivers should have seen much bigger drops after large reductions in wholesale costs during Q3.

Business Secretary Grant Shapps also intervened on fuel prices just before Christmas, penning a letter to retailers to draw their attention to the ongoing CMA investigation and urge them to “take any steps necessary to ensure savings are passed on to
consumers”.

Shapps added that the Government would “not hesitate to act to ensure competition is healthy and consumers get a fair deal on their fuel”.