The London commuter town where a Topps Tiles takeover could mean worse deals

The UK anti-trust regulator has warned that Topps Tiles’ acquisition of 30 stores from rival CTD Tiles could lead to competition issues in four areas of the country – including the commuter town of Dorking in Surrey. Concerns have been raised that businesses and shoppers in four areas could face worse deals or service due to the reduction in competition.

Topps bought all the stores for about £9 million in August last year after CTD, which was the second largest specialist tile retailer in the UK behind Topps, fell into administration. The Competition and Markets Authority (CMA) said it received several complaints after the agreement was confirmed, including concerns over “how the deal impacted businesses and retail customers in specific areas of the country”.

Following an initial phase 1 investigation, the CMA found specific competition concerns in Dorking, Edinburgh, Inverness and Aberdeen, where it believes the deal could lead to worse deals and service for customers. Leicestershire-based firm Topps has until Monday February 24 to submit proposals to allay the regulator’s concerns and avoid a potential, more thorough investigation.

Joel Bamford, executive director for mergers at the CMA, said: “Having looked at the evidence, we’re concerned Topps Tiles’ purchase of CTD Tiles may reduce competition in Dorking, Edinburgh, Inverness and Aberdeen. This loss of competition could lead to worse deals and service in those areas.

“Whether you’re retiling your own home or a business that provides renovation services, the merger could make such projects more expensive. Topps Tiles now has the opportunity to offer solutions to our concerns, otherwise this case will proceed to a more in-depth investigation.”

In a statement to the stock market, Topps said in response: “The company will continue to work with the CMA in a constructive and professional manner, as it has done throughout this process. A further announcement will be made in due course.”

Topps’ largest shareholder, MS Galleon, said the business had not identified concentration risk properly and faced “significant risk of remedies” from the deal. Piotr Lipko, managing director of MS Galleon, said: “We have, on multiple occasions, raised concerns about the strategic rationale for the acquisition of CTD and the unreasonably high valuation.

“Today’s CMA decision only serves to reinforce these longstanding concerns around this transaction. What the board should be focused on is strategically repositioning the business, central to which will be delivering a modernised, omni-channel customer proposition with a vastly improved digital offering, while executing the succession plan for the CEO, Rob Parker, at pace.

“Defending the costly and poorly thought-out acquisition of the outdated CTD business will not further that aim.”

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