Proposed divestment would remedy merger questions.
The OFT has told Home Retail Group, the owner of Homebase and Argos, it is considering 'undertakings' in the acquisition of 27 stores from Focus DIY instead of referring the completed deal to the Competition Commission (CC).

The OFT investigated the completed merger for two reasons: first, it was not notified and, second, it felt the deal may pose harm to competition and consumers.

It said that of the 27 acquired stores by HRG, 12 of them gave rise to competitive overlaps.

"However, the scope of the OFT's concerns and the appropriate remedy were ultimately reduced to one of these overlap areas following thorough evaluation of evidence supplied by market participants," it said today in a statement.

Simon Pritchard, OFT senior director of mergers said: "We were ultimately able to narrow our concerns and are satisfied that the proposed divestment remedy would, in principle, resolve them."

HRG has offered to divest either a former Focus store or an existing Homebase store to remove the overlap.

The OFT said as part of its usual procedure where there are relatively few potentially suitable purchasers, it will require HRG to secure an up-front purchaser before consulting publicly on the terms of the undertakings.

It also stated that if satisfactory undertakings from Home Retail are not given, the merger will be referred to the Competition Commission.

Home Retail bought 27 leasehold stores from Focus DIY for £40m last October.