UK watchdog says Co-op Group takeover of Southern Co-op may cut competition

Sept 15 (Reuters) - Britain's competition watchdog on Tuesday said retailer Co-operative Group's acquisition of regional convenience store operator Southern Co-operative could reduce competition in some markets.

The companies operate food retail and convenience store networks across Britain, with overlapping operations in some areas.

• The Competition and Markets Authority said Co-operative Group and Southern Co-operative have until September 22 to offer legally binding undertakings to address its concerns.

• A Substantial Lessening of Competition — a legal test — finding at Phase 1 does not block the deal but signals that the regulator has identified competition concerns that must be addressed before proceeding without a Phase 2 probe.

• Co-operative Group, one of Britain's largest food retailers, operates more than 2,500 stores; Southern Co-operative runs convenience stores, funeral homes and Starbucks outlets across southern England.

• Southern Co-op's profits have declined over the past three years, with last year's cyberattack on Co-op further hurting its performance. The two already work closely through the Federal Retail Trading Society, a buying and supply group.

(Reporting by Ankita Bora in Bengaluru; Editing by Joyjeet Das)