Investigation into Poundland's 99p takeover
The Competition and Markets Authority (CMA) said that this takeover threatens the "choice, value and service for shoppers", and will now be undertaking an in-depth investigation. Poundland, as a result, might have to sell off some of its shops.
In a statement, Poundland said: "Poundland is carefully considering the CMA’s announcement, together with the full detail behind it and will make a further announcement in due course."
You'll remember that Poundland announced they'd agreed a £55m deal to buy 99p Stores.
The regulator said: "The CMA found that the loss of competition between the companies may lead to a worsening of their offer locally, through a reduction in quality, fewer promotions or closure of their stores."
Sheldon Mills, CMA senior director of mergers, added: "As consumers become ever-more price conscious, they value the low prices offered by these retailers and their shopping around for bargains is aided by the simplicity of their pricing. 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."
"Without competition from 99p Stores, there is the possibility that Poundland may have the incentive and ability to deteriorate its offer in these areas to the disadvantage of customers that have come to rely on their offer."
"Given the potential impact on customers, we will now open a detailed investigation into this merger unless the parties offer suitable undertakings."