The proposed merger between Sainsbury’s and Asda has been blocked by the UK’s competition watchdog.
Sainsbury’s boss Mike Coupe said the regulator was ‘effectively taking £1bn out of customers’ pockets’, but added that the supermarket would not appeal against the decision. “The CMA’s conclusion that we would increase prices post-merger ignores the dynamic and highly competitive nature of the UK grocery market,” he said.
The deal would have created the UK’s biggest supermarket chain, accounting for £1 in every £3 spent on groceries. Sainsbury’s and Asda had said it would have cut their costs, allowing them to lower prices for consumers across the UK. But the CMA, which had previously raised concerns about the deal, said the merger would lessen competition at both a national and local level.
Stuart McIntosh, chair of the CMA’s inquiry group, said in a statement: “It’s our responsibility to protect the millions of people who shop at Sainsbury’s and Asda every week. Following our in-depth investigation, we have found this deal would lead to increased prices, reduced quality and choice of products, or a poorer shopping experience for all of their UK shoppers. We have concluded that there is no effective way of addressing our concerns, other than to block the merger.”
Earlier this year, the supermarkets promised to sell between 125 and 150 of their stores to allow the merger to proceed, along with some petrol stations and convenience stores. They also pledged to bring in £1b of price cuts for consumers if the deal went ahead, and be held to this by an independent guarantor. Sainsbury’s said the CMA had ignored this offer, and misunderstood the potential impact on competition.
But the CMA said it had conducted surveys of 50,000 of the supermarkets’ customers, and commented on the BBC’s Today programme: “Those promises were based on cost savings which we don’t think are likely to be realised. Also those price promises are very likely to be difficult to track in practice.”