Pubs and Bars

Stonegate Ei merger must address local concerns, CMA finds

Stonegate Pub Company’s proposed £1.27bn purchase of Ei Group does not raise UK-wide competition concerns but could damage competition in 51 local areas, the CMA has found.

The two pub groups operate close to 5,000 pubs across the UK, including popular chains such as the Slug and Lettuce and Yates, as well as a large number of unbranded pubs.

After completing its initial Phase 1 investigation, the CMA has found that the purchase “does not raise competition concerns” on a UK-wide basis. While the merged business will be the largest pub group in the UK, it will continue to face competition at the national level from several other large pub groups.

However, the CMA warned that while sufficient competition will remain after the merger in most cases, it said the deal could reduce choice for pub goers in 51 local areas where the combined business would face “only limited competition”.

The CMA is therefore concerned that, if the businesses were to merge, pub goers in those areas could be faced with price increases or lower quality products and services.

The CMA has given the companies until 13 December 2019 to suggest ways of overcoming these concerns. If proposals are not offered, or do not sufficiently address the issues raised, then the merger will be referred for an in-depth Phase 2 investigation.

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