The Co-operative Group's £1.5 billion acquisition of Somerfield has been given the green light by the Office of Fair Trading (OFT).

The OFT said today that the merger would not give rise to competition concerns at a national level. With a market share of about 8 per cent, the OFT said the merged retailer will be a strong fifth player to compete with the big four – Tesco, Asda, Sainsbury’s and Morrisons.

The Co-operative Group said in a statement: “The Co-operative and Somerfield welcome this afternoon’s announcement by the OFT, which, subject to us addressing a small number of local competition issues, clears the way for the creation of a stronger fifth player in the grocery market. This is good news for consumers and good for competition.”

The Co-operative Group has offered a divestment package to meet each of the OFT’s local competition concerns, resulting in the disposal of 126 stores. The OFT said it is satisfied that the majority of the stores will be of interest to several buyers, but to eliminate any risk the parties have agreed to find suitable buyers up front before the remedies package is finalised.

OFT chief executive John Fingleton said: “Once finalised, the divestment package will directly safeguard the welfare of many thousands if not millions of UK consumers by restoring grocery competition in the 126 local areas affected, while allowing an otherwise likely pro-competitive merger to go ahead.”