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The UK's Office of Fair Trading has ruled that the Co-operative Group must dispose of 126 local stores in order to complete its purchase of the Somerfield supermarket chain.

According to the OFT, the £1.57bn deal wouldn't damage competition nationally, but could have a negative effect at local level.

The OFT said it is considering an offer from the Co-op to divest stores in the identified markets of concern.

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."

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