The competition watchdog has said it could approve Morrisons’ takeover by Clayton, Dubilier & Rice (CD&R) after the US private equity firm proposed the sale of some its petrol station empire.

CD&R, which also owns petrol station giant Motor Fuel Group (MFG), won a lengthy auction to buy the Bradford based retailer in October.

MFG operates 921 petrol stations across England, Scotland and Wales under a number of different brands, while Morrisons runs 339 petrol stations at its supermarkets.

The watchdog did not disclose how many forecourts would be sold as part of the proposal.

The Competition and Markets Authority (CMA) launched an investigation into the £7 billion takeover in January.

As part of the CMA's latest update in March, the authority said it could pursue a deeper probe due to competition concerns.

The regulator warned that the takeover of Morrisons could lead to higher fuel prices in 121 locations across the UK.

It said MFG and Morrisons both have forecourts in these locations and would face “limited competition” from other players following the merger.

On Thursday, the CMA said it received a proposal last week from CD&R which would see it sell some of its petrol stations in order to push the takeover through.

“The CMA considers that there are reasonable grounds for believing that the undertakings offered by CD&R, or a modified version of them, might be accepted by the CMA under the enterprise act 2002,” the regulator said.

Why would petrol prices increase? 

Speaking earlier this year, the CMA said it has concern for 121 local areas where MFG and Morrisons both have forecourts and would face “limited competition” from other players following the merger.

It said “the deal could lead to an increase in prices” due to the lack of competition.

The warning comes after a recent surge in the price of petrol and diesel.

Colin Raftery, senior director of mergers at the CMA, said: “Prices for petrol and diesel have recently hit record highs, which makes it even more important that we don’t allow a lack of competition at the pump to make the situation worse.

“We’re concerned that this deal could lead to higher prices for motorists in some parts of the country.

“But if CD&R and Morrisons are able to address these concerns, then we won’t need to move on to an in-depth investigation of the merger.”

Supermarket rival Asda agreed to sell 27 petrol stations last year in order to help its £6.8 billion takeover pass following concerns from the competition regulator.